Gold Exchange Traded Commodity (ETC) demand remained upbeat for the nine consecutive weeks as the investors remained buoyant to park their funds under the safe haven instrument mainly on the back of sustained weakness in the Eurozone and banking instability in the region.
A recent report from etfsecurities revealed that ETFS' Physical Gold holdings had hit another record high of $11.3 bn (9.3mn oz). According to the report, Gold ETC holdings rose for the ninth consecutive week, with flows rising by $110mn as continued concerns about European sovereign risk and banking stability kept demand for safe haven assets strong and helped drive the gold price to a new all time high of $1,252 per ounce.
Funds inflows over the past two months have reached $1.7bn. ETFS Physical Gold (PHAU) saw the largest inflows last week ($66mn) with US listed ETFS Gold Trust (SGOL) also seeing strong inflows of around $19mn (total inflows this year of $166mn), indicating that it is not just European investors that are seeking safe havens from recent market turbulence.
Meanwhile, ETFS Physical Silver ETCs see holdings hit a record high of $680mn (37.2mn oz). The steady rise of inflows into silver ETCs indicates that investors are building medium-term strategic positions, with total inflows of $65mn YTD. ETFS Physical Silver (PHAG) has seen the strongest flows with AUM now standing at $462mn.
Persistent concerns about the declining value of Euro-denominated assets have likely been a key factor driving inflows, as investors seek ways to diversify their safe haven holdings.
Likewise, inflows continued for long oil ETCs, which saw the 6th consecutive week of inflows, bringing total inflows to $374mn over the period. With the oil price now sitting around the middle of its $70-$80/bbl trading range, investors remain buyers, but purchases are slowing down, with new inflows of $8.2mn last week, indicating some investor uncertainty about the scope for further oil price gains after the recent rebound.
However, investors remained heavily bearish on the outlook for natural gas, where it witnessed a record outflow from long natural gas ETCs on the recent price rebound. Last week outflows from long natural gas ETCs hit a six-month high of $89mn, while ETFS Short Natural Gas saw its largest inflows in six months.
The report suggested that if not physical gold, gold ETCs remained most favoured investment destination for the investors.