admin
SINGAPORE. – Gold traded in a tight range yesterday as investors awaited US economic data but sentiment was undermined by holdings in the largest gold-backed exchange-traded fund dropping the most in 15 weeks. Holdings in SPDR Gold Trust fell 10,51 tonnes on Monday to 871,72 tonnes, their lowest since February 2009. It was the fund’s biggest one-day fall in holdings since early July.
SPDR’s holdings have fallen about 430 tonnes so far this year and have been a big contributor to the 21 percent drop in gold prices in 2013.
Flows from the fund are watched closely as they provide an insight into the thinking of investors such as US hedge fund manager John Paulson who have big positions in gold.
“(The) low in ETF position mirrors a structural adjustment,” said Alexis Garatti, an economist at Haitong International Research in Hong Kong.
“With quantitative easing policies, excess liquidity boosted positions in gold but we will soon exit quantitative easing, which is why there is a normalisation now.”
Spot gold slipped 0,09 percent to US$1 313,91 an ounce by 3.34am GMT, after ending flat in the previous session.
“The drop (in SPDR holdings) doesn’t bode too well for prices especially now when there hasn’t been US data for a while,” said one Hong Kong-based trader.
“However, prices will be range-bound till we get non-farm data later today (yesterday).
“It should also get some support from talks that tapering could get delayed into next year,” the trader said.
Traders are looking towards US non-farm payrolls data for September, which was due yesterday after being delayed by a partial government shutdown earlier this month, to gauge the fate of the Federal Reserve’s bond-buying stimulus.
Some economists polled by Reuters believe the Fed could postpone the scaling back of its US$85 billion monthly bond purchases to next year as budget issues in Washington remain unresolved.
Legislators reached only a temporary agreement last week to avert a historical debt default, raising the risk of another government shutdown early next year.
Gold could see some stability for now as the delay in tapering likely increases demand for gold in emerging economies, Mr Garatti said. – Reuters.
Online Reporter