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Gold investor flows increase, physical market soft: Barclays

https://www.chemnet.com   Oct 06,2015 Platts

Investor appetite for gold increased at the end of September, seen in increased inflows into gold exchange-traded products, while physical markets remained weak with China on holiday and soft Indian demand, Barclays analysts said in a note Monday.

As of September 30, a total of 4.1 mt of gold was added to gold exchange-traded products, taking total holdings to 1,652 mt, according to Barclays.

Given that the gold price fell than $30/oz during the period, "this may suggest investors are bargain buying, in contrast with the trend following flows so far this year," Barclays said.

Speculative net positions were also seen to be moving to the long side through a reduction of short positions, but managed money net long positions remain near the historical low and COMEX trading volumes are soft, according to the bank.

In a positive sign of retail demand, data released by the US Mint last week showed 147,500 troy oz (4.6 mt) of gold coins were sold in September, up 21% month on month and up 103% year on year.

"US retail sales have been very strong since the price drop in July, acting as one of few bright spots for gold demand," Barclays said, adding Asian demand remained a concern.

China moved into its seven-day holiday period last Thursday, with the Shanghai Gold Exchange closed and most other markets shut, which saw premiums to the international price come down from around $5/oz to $2.5/oz.

Meanwhile the physical market in India continued at a discount, heard as high as $8/oz last week as the market struggled with lackluster demand across the country.

Sources in India put the discount at $5-7/oz Monday morning, but with signs demand had picked up heard from dealers in Delhi and Ahmedabad.

The London Bullion Market Association Gold Price settled at $1,134.35/oz Monday morning, down $6.40/oz on the previous session.
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