Investors lured to gold’s defensive traits, reports ETF Securities

Feb 27th, 2017 | By | Category: Commodities

Gold has remained a firm favourite with investors, according to ETF Securities’ latest weekly funds flows report, attracting a net $192.1m into the firm’s gold ETPs during the week ended 24 February 2017. These figures – the fourth consecutive week of positive net gatherings – marked a 30 week high for gold ETPs net inflows.

Investors lured to gold’s defensive traits, reports ETF Securities

Investors poured $192.1m into ETF Securities’ gold ETPs during the week ended 24 February 2017.

As reported by ETF Securities, investors were lured to gold’s defensive characteristics as the Eurozone remains mired in political uncertainty with Dutch and French elections just around the corner.

The European Central Bank has also hinted at temporarily moving away from its capital key in order to subvert the problems associated with its limited pool of bonds for its quantitative easing programme. ETF Securities writes: “Expanding its QE activities is likely to heap pressure on the euro and investors are looking to gold as a monetary devaluation hedge.”

ETF Securities offers the ETFS Physical Gold (LON: PHAU) which is up 0.9% over the past week and 8.1% year-to-date (YTD). It has a total expense ratio (TER) of 0.39%.

Meanwhile, relatively modest oil ETP outflows of $12m, mostly from WTI oil ETPs, showed investors continued to take profits for the fourth consecutive week despite OPEC production cuts. The firm writes: “OPEC Secretary General Barkindo indicated his optimism that the cartel can sustain a higher level of compliance than the 90% reported in January. Investors, however, appear less than convinced: We believe that oil prices will remain under pressure in the near term as US oil production and inventories continue to grow.”

ETF Securities’ largest oil-tracking ETPs are the $332m ETFS Brent 1mnth (LON: OILB) and the $778m ETFS WTI Crude Oil (LON: CRUD). Each has a TER of 0.49%.

Natural gas ETPs received net gatherings totalling $12.8m – their weekly largest inflows since June 2015 – as a price drop of another 6.6% prompted bargain hunting by investors. According to analysts at ETF Securities, the fall in price to November 2016 lows corresponds to lower demand across all sectors due to unseasonably warmer weather in the US. The ETFS Natural Gas (LON: NGAS) also has a TER of 0.49%.

Copper bucked the trend of industrial metal inflows, recording the largest outflows in 14 weeks as investors withdrew $21.9m. The ETFS Copper (LON: COPA) is down 0.9% for the week but up 7.0% YTD as the copper price has benefited from outages in mines that account for close to 12% of global capacity. ETF Securities writes: “If these outages last for another few weeks, we are likely to see another year of a supply deficit in 2017. The deep capex cuts we have seen over the past few years will take longer to materially bite into supply and so copper inventory could remain elevated for several years.” COPA has a TER of 0.49%.

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