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Gold rallies as ETFs resurgence continues

Last updated: 13:17 30 Jan 2015 GMT, First published: 14:17 30 Jan 2015 GMT

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Gold recovered from the two-week low of $1,250 per troy ounce and was heading for its best monthly gain for almost a year.

The spot price fell 2% yesterday as the US Federal Reserve reminded the market that whatever is happening in Europe, US interest rates are still going to go up.

Commerzbank cautioned today that there may be more short-term weakness ahead as futures investors had built up net long positions in gold recently.

Balancing that, however, has been a resurgence of buying through exchange traded funds (ETFs).

ETFs saw an inflow of 7.1 tons yesterday, much of which went into SPDR Gold Trust, the largest of the gold-backed funds.

Since the start of 2015, some 65 tons has flowed back the gold-backed ETFs, noted Commerzbank, the highest monthly inflow since September 2012. 

SPDR Gold Trust, meanwhile, saw its holding rise by 50 tons, the highest monthly inflow since November 2011.

“The U-turn made by ETF investors is one of the most remarkable developments on the gold market this year and one key reason for the price rise since the start of the year,” said the German bank.

Ahead of the start of trading on Wall Street, spot gold was US$6 higher at US$1,263, with a lower than expected US GDP number providing some impetus.

Growth was still a handy 2.6% in the final quarter of 2014, but forecasts had been for over 3% with business investment the reason for the miss. Over the whole year the US economy grew by 2.4%.

Spot gold was US$1,262 ahead of Wall Street's open Friday. Silver and platinum were flat at US$16.91 and US$1,218 respectively.

Major movers

Randgold Resources up 165p at 5,585p

Fresnillo up 31p at 894p

Anglo American up 19p at 1,116p


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