Risk asset rebound prompts gold ETC profit taking and energy inflows

the world. Last week, indications of progress between Greece and its creditors and improved US data kept markets in «risk on» mode. Spain, Italy and France had successful bond auctions and the Euro rallied (while the US dollar weakened) which pushed risk assets and gold higher. Investors appeared to take the strong rally in the gold price as an excuse to take some profits, while improved sentiment towards global growth and a continued desire to hedge against potential worst case Iran scenarios pushed up inflows into energy ETCs. This week, investors will be keeping an eye on Eurozone and German PMIs (Purchasing Managers’ Index) and industrial new orders data as industrial production is critical to the recovery of the Euro area. The release of UK and US GDP (Gross Domestic Product) growth will also be monitored closely as well as progress in Greece’s private sector debt negotiations and the Fed’s long-term interest rate forecasts due to be announced following the FOMC (Federal Open Market Committee) meeting on Wednesday.

Gold ETCs see biggest outflow since October 2011, as the recent rise in the gold price prompted investor profit-taking. Gold ETCs recorded $79m outflows last week. At the same time Silver ETCs registered almost $9m outflows, the largest amount since September 2011. Positive signals from the US and strong demand from emerging markets prompted inflows into Platinum ETCs and Palladium ETCs, each seeing $8m and $4m inflows respectively.

Energy ETCs see largest inflows ($27m) since June 2011, as mixed sentiment drives investors’ inflows into both Long and Short Crude Oil ETCs. Last week was characterised by choppy trading in the oil market as sentiment wavered on mixed news. US crude oil stocks declined last week on the back of a sharp decrease in imports. At the same time, the US government decided against the Keystone pipeline project that was to connect Canada’s oil fields to the Gulf of Mexico. The proposed pipeline was supposed to reduce the supply surplus in the North American market. It was another week of inflows for Natural Gas, with ETFS Leveraged Natural Gas (LNGA) receiving over $10m, the biggest inflow since August 2011. The persistent oversupply in the market has brought the natural gas price to a ten year low, attracting many investors.

Industrial Metal ETCs record $6m outflows, the biggest in five weeks. Profit taking prompted $1.5m outflows in ETFS Copper (COPA) and ETFS Leveraged Copper (LCOP) last week. At the same time, ETFS Short Copper (SCOP) registered $2m outflows as better than expected US data and sign of credit easing in China boosted the demand outlook from emerging markets.