For the second week in a row, London-based ETF Securities’ gold and platinum ETFs experienced net outflows as expectations for a March rate hike by the Federal Reserve increased. According to the firm’s weekly flows analysis, its gold ETFs saw $71 million outflows as the spot gold price fell below $1,200/oz for the first time since the beginning of February.
Janet Yellen, Chair of the Board of Governors of the Federal Reserve System. (File image)
Strong US employment data last week all but guaranteed a rate rise on March 15th, with market participants now turning their focus to the Fed’s rate forecasts for an indication of how many rate hikes to expect this year.
Other commodity ETFs did not fare so badly however, with both crude and industrial metals recording inflows last week. Industrial metals ETFs recorded a fourth straight week of inflows as strong manufacturing data from around the world continued to support sentiment. ETF Securities’ aluminium ($2.2m) and nickel ($2.7m) ETFs were the most successful gatherers of net new assets within the industrial metals category during the week.
Crude oil ETFs saw relatively small inflows of $10m despite oil prices falling last week. WTI crude fell back below $50 as US inventories rose for a ninth straight week to a new high this year. Despite OPEC’s effort to cut production, US oil production continues to recover and pressure oil prices to the downside.
Political uncertainties made an impact on currency ETPs last week, according to ETF Securities. Long GBP ETPs saw outflows of $5m as the government suffered more setbacks to its proposal to exit the EU, and it was revealed that UK consumer data came in softer than analysts’ mean expectations. Long EUR ETPs also saw net outflows of $8m ahead of the Dutch elections this week. Polls still indicate a low likelihood of populist candidate Geert Wilders being able to form a coalition if his party wins, but uncertainty is weighing on investors’ minds, especially given the recent reliability of electoral polls.