Gold News

High Gold Price Spurs Investment Selling, Not 'Safe Haven' Buying, as ETFs Shrink

The GOLD PRICE in London's professional bullion market fell $10 per ounce into Friday afternoon's benchmarking auction, dropping towards $1982 to trade almost unchanged from last week's 5-month high as Israel continued to prepare for a ground invasion of Gaza.
"Investors flee to safe-haven metal even as interest rates rise," claims the Nikkei newspaper in Tokyo.
"The Middle East conflict [has] kept investors drawn towards the safety of bullion despite a higher-for-longer US interest rate backdrop," agrees Reuters.
But Western gold investment products in fact continue to see strong outflows, with the world's 2 largest gold ETFs – the GLD and IAU trusts traded on the New York stock market – heading for their 8th and 14th weekly outflows respectively, shrinking to the smallest combined size in 4 years.
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BullionVault users had by Thursday night taken their net selling to more than half a tonne from end-August's record-high vaulted gold holdings.
Major German coin-and-bar retailer Pro Aurum meanwhile reports seeing 3 times the volume of customer selling as buying.
"Investment in precious metals in 2023 is significantly below last year's level," confirms another retailer in Germany, the world's 3rd largest private bar and coin consumer in 2022.
On top of that, "Thanks to the increased prices, many investors are taking profits and selling bars and coins" back to them.
Chart of gold in Euro terms, London PM benchmarking price. Source: LBMA
Priced in the Euro, gold bullion today slipped 0.2% from last Friday's record-high global benchmark of €1879 per Troy ounce.
The UK gold price in Pound per ounce showed the same small retreat from its own new record London PM fixing of last Friday, set at nearly £1637.
With the Bank of England expected to hold UK interest rates at a 15-year high of 5.25% at its November meeting next week, the European Central Bank held its overnight deposit rate at a currency-union record of 4.0% on Thursday.
US data meantime said the world's largest economy grew at a 4.9% annualized pace between July and September – the fastest pace of GDP growth in nearly 2 years – with new figures today saying personal income growth slowed but spending jumped and PCE inflation held firm at 3.4% per year last month.
Both new and continuing US jobless benefit claims yesterday showed a rise on data for last week, but starting from historically low levels.
Durable goods orders from September meantime came in stronger than expected, as did the US trade deficit in goods as well as the number of home purchases now pending.
On a weekly basis, the price of London silver meanwhile lost 2.0% in Dollar terms from noon last Friday, reversing just over 1/5th of its previous gains from the 30-week Friday low of $21.15 set on 6 October, eve of Hamas' terrorist atrocities across southern Israel.
The Dollar gold price fixed 8.9% higher from that Friday 3 weeks ago, showing its fastest such rise since August 2020 marked the peak of gold's first-wave Covid surge to new all-time record highs above $2000 per Troy ounce.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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