The gold price holds at a high level, but gold ETCs record outflows. Trading in energy ETCs is quiet, at most gas price trackers are still tempting.
31 August 2023. FRANKFURT (Börse Frankfurt). Gold prices remain high, but high interest rates on the bond side are dampening interest in gold ETCs. "After a short break between March and May, the sell-off in gold ETCs resumed," reports Munich-based analysis and trading house Crossflow. Since the beginning of the year, net outflows (through the end of July) from precious metals ETCs on the European ETP market totaled 3.9 billion euros. Issuer WisdomTree also reports high outflows from gold ETCs for the past four weeks.
The gold price is currently back at 1,944 U.S. dollars an ounce, after briefly falling below 1,900 U.S. dollars in mid-August. Since the beginning of the year, there is still a plus of almost 7 percent. For WisdomTree's Mobeen Tahir, it's quite amazing that the price has been able to hold up in an environment of rising interest rates. "After all, ten-year U.S. government bond yields have climbed to their highest level since 2007." Commerzbank even sees the gold price back at US$2,000 by the end of the year. "The rise is likely to continue when it becomes clearer that the interest rate peak has been reached or that the first interest rate cuts are likely," says commodities analyst Barbara Lambrecht.
Gold ETCs Sales Hit
Besides Xetra-Gold (DE000A0S9GB0), gold ETCs from Xtrackers (DE000A2T5DZ1), Amundi (FR0013416716), WisdomTree (JE00B1VS3770) and Invesco (IE00B579F325) are currently showing high turnover on the Frankfurt Stock Exchange. Lang & Schwarz saw good turnover in gold ETCs over the past four weeks, mostly buying, such as Xetra-Gold and the iShares Physical Gold (IE00B4ND3602). The stock of Xetra-Gold remains at a high level, currently 224 tons. However, at the end of 2022 it was 231 tons, at the end of 2021 238 tons.
Lambrecht
In July, gold ETCs again dominated ETC trading on Xetra. As usual, Xetra Gold was the top trader. Xtrackers IE Physical Gold EUR Hedged (DE000A2T5DZ1) and Invesco Physical Gold (IE00B579F325) were also heavily traded. Silver ETCs also saw a lot of turnover, especially WisdomTree Physical Silver (JE00B1VS3333) and Xtrackers Physical Silver (DE000A1E0HS6). The first non-precious metals ETC, WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98), was only ranked 12th.
Oil ETCs: Little interest despite price rise
The strong oil price increase from July has not continued. After rising from 72 to over 87 U.S. dollars for a barrel of North Sea Brent, it is currently back to 85.26 U.S. dollars. "Some news on the supply side surprised positively," explains Lambrecht. Hopes are pinned on Venezuela, Iran and Iraq. For example, daily production in Iran has already risen by 350,000 barrels since the spring.
According to WisdomTree, energy ETCs were also on the sell lists in the past four weeks. They are currently not playing a major role in Xetra trading. The top-selling oil ETCs on Xetra - the WisdomTree WTI Crude Oil 2x Daily Leveraged (JE00BDD9Q840) and the WisdomTree WTI Crude Oil (GB00B15KXV33) - can only be found in 19th and 23rd place on the turnover list for July.
Leveraged gas price tracker popular
Gas ETCs show a higher trading volume, as the Xetra figures show. Fabian Wörndl of Lang & Schwarz also sees interest, especially in leveraged gas ETCs, specifically the WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98) and the WisdomTree Natural Gas 3x Daily Short (IE00B76BRD76). The price of natural gas had risen briefly recently, but then fell again. "The reason for the price correction in European natural gas is likely to be the strike-related LNG supply outages from Australia, which have been averted for the first time," explains Ulrich Kater, chief economist at DekaBank. The forward contract for Dutch natural gas (Dutch TTF) relevant for Europe is currently 36 euros/MWh. Last summer, it was briefly over 300 euros/MWh, followed by a decline to 23 euros/MWh in June of this year.
Kater
Not a year for industrial metals
Slight inflows on a four-week view WisdomTree reports for industrial metals ETCs. Prices have recently climbed again. The price of WisdomTree Industrial Metals (GB00B15KYG56) is also pointing upward, but is still down 14.4 percent since the beginning of the year.
"Disappointing economic data from China, especially from the real estate sector, is weighing on industrial metals prices," explains WisdomTree's Tahir. He does not expect supply constraints this year. "We are skeptical that the bottom is already behind us," notes Lambrecht of Commerzbank. After all, China's measures to support the economy have not gone very far so far, he says. "In addition, sentiment indicators have clouded over in Europe and the U.S."
by: Anna-Maria Borse, 31 August 2023, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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