NEW YORK (Scrap Register): Gold exchange-traded-fund demand held up despite recent weakness in prices, and bargain hunting has also emerged, said Jeffrey Nichols, managing director of American Precious Metals Advisors and senior economic adviser to Rosland Capital.
The precious metal sold off over the last week, which Nichols blames on U.K. officials saying the country would withdraw from the European Union sooner than expected, thereby boosting the U.S. dollar; improved U.S. economic data pointing to a possible rate hike; and technical-chart-related selling.
“Now, most immediately, having shed some $75 to $100 an ounce in a matter of days, we are seeing some technical support and bargain hunting as gold tests the $1,250 level,” Nichols added.
“If this key chart point holds, as I think it will, gold could soon be on the upswing again.” Much of the pressure seems to have been the result of selling by speculators in the futures market, with demand from retail and institutional investors still firm, Nichols noted.
“Lately, as gold prices have dropped, these institutional players have added to their holdings via exchange-traded funds,” he added. “Gold ETFs now stand at over 2,000 tons, near the highest level in over three years. I expect this market segment will continue to grow, especially as some fund managers seek bargains at recently depressed price levels.”