The price of gold is close to its all-time high, but gold ETCs are still on the sell-off lists. The oil price has made a leap upwards, but energy ETCs are also being sold.
1 February 2024. FRANKFURT (Börse Frankfurt). Gold remains in demand, but gold ETCs are not. Outflows from gold ETCs were already a feature of 2023, as the industry organization World Gold Council also reported this week. This trend has continued in the first few weeks of the new year. Mobeen Tahir from issuer WisdomTree reports significant outflows from gold ETCs for the past four weeks. Commodities analyst Barbara Lambrecht from Commerzbank also points to the ongoing gold ETC sales. However, she expects this to change soon: "We assume that sentiment will turn as the year progresses and that institutional investors will increase their positions again as soon as interest rate cuts are within reach," she explains.
Gold: record high not far away
The price of gold fell slightly in January and stood at USD 2,041 per troy ounce on Thursday lunchtime, compared to USD 2,065 at the end of 2023. A new all-time high of 2,086.48 US dollars was reached shortly before the end of the year.
In 2023 as a whole, demand for gold fell by 5% to 4,448 tons compared to 2022, as the industry organization World Gold Council announced in its annual report yesterday (Wednesday). The series of purchases by central banks continued, reaching 1,037 tons, the second-highest level since records began. In contrast, outflows from ETCs predominated, especially in Europe. Demand for bars and coins also declined. The global jewelry market, on the other hand, proved to be remarkably resilient. Read more here.
Xetra-Gold (DE000A0S9GB0) continues to be heavily traded, as do gold ETCs from Xtrackers (DE000A2T5DZ1, DE000A1EK0G3), Invesco (IE00B579F325) and iShares (IE00B4ND3602). However, silver price trackers such as WisdomTree Physical Silver (JE00B1VS3333) also see a lot of turnover. Xetra-Gold holdings have continued to decline slightly and currently stand at 190 tons, down from 199 tons at the end of 2023 and 231 tons at the end of 2022.
Sharp rise in oil price due to situation in the Middle East
There is currently more movement in the oil price. A barrel of North Sea Brent crude currently costs USD 81, compared to a low of USD 73 in mid-December. "The US and UK airstrikes on Houthi targets in Yemen have raised fears that an escalation of the conflict could further disrupt the flow of oil via major trade bottlenecks," notes Tahir. Lambrecht also refers to the situation in the Middle East: "At the moment, it is mainly the geopolitical risks that are supporting the price." On the demand side, however, the picture is mixed. The economy in Europe continues to cause concern, but the significant reduction in the minimum reserve rate in China is positive. The bank therefore assumes that the oil price will remain at its current level - unless the situation in the Red Sea escalates further.
According to WisdomTree, energy ETCs have also been on the sell lists over the past four weeks, albeit not on a large scale. The WisdomTree Brent Crude Oil (JE00B78CGV99) and the WisdomTree WTI Crude Oil (GB00B15KXV33), as well as short and leveraged products such as the WisdomTree Brent Crude Oil 3x Daily Short (IE00BLRPRK35) and the WisdomTree WTI Crude Oil 1x Daily Short (JE00B24DK975) have repeatedly seen high turnover.
Lambrecht
Industrial metals: hopes for China
Industrial metal prices initially fell this year, before rising again. "Hopes for a faster recovery of China's economy have caused prices to rise significantly," says Lambrecht. However, the susceptibility to new setbacks is still high. "Against the backdrop of the fragile economy, industrial metal prices are likely to trend sideways with greater fluctuations in the first quarter." Industrial metals do not play a major role in ETC trading, with only the WisdomTree Industrial Metals (GB00B15KYG56) and the WisdomTree Copper (GB00B15KXQ89) showing any significant turnover.
by Anna-Maria Borse, 1 February 2024, © Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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