Hopes of falling interest rates in particular caused interest-free gold to rise to its highest level ever. However, many ETC investors had already exited beforehand. The oil price remains at a high level.
7. March 2024. FRANKFURT (Börse Frankfurt). The price of gold is rising and rising, with today's Thursday being the third record day in a row. The precious metal peaked at 2,159 US dollars per ounce in the morning. A new all-time high was also set in euros this week at 1,974 euros. "Gold prices are currently out of control," commented Deutsche Bank analysts.
Drivers include speculation that key interest rates will soon be cut. This would make gold more attractive as an interest-free form of investment. And as the USA is likely to start cutting interest rates, this could weaken the US dollar and boost demand for gold outside the eurozone. The geopolitical risks in the Middle East, Ukraine and the Red Sea are also likely to play a role.
Further outflows from gold ETCs
However, many on the ETC market are no longer benefiting from this - they have already exited. This is because 2023 was characterized by outflows from gold ETCs, and this has continued in the new year - no sign of a rush. Leo Puschmann from Lang & Schwarz reports "inconspicuous trading". Nevertheless, he is seeing both buying and selling. The focus is on simple price trackers, such as Xetra-Gold (DE000A0S9GB0) and Xtrackers Physical Gold EUR Hedged (DE000A1EK0G3). The situation is similar in the case of silver: Xtrackers Physical Silver (DE000A1E0HS6) has a lot going for it.
In addition to Xetra-Gold, gold ETCs from Amundi (FR0013416716), Invesco (IE00B579F325), iShares (IE00B4ND3602) and Xtrackers (DE000A2T5DZ1, DE000A1EK0G3) and silver price trackers such as Xtrackers Physical Silver (DE000A1E0HS6) and WisdomTree Physical Silver (JE00B1VS3333). Xetra-Gold holdings have fallen again and currently stand at 184 tons. At the end of 2023 it was 199 tons, at the end of 2022 still 231 tons.
"Brent price remains well supported"
The price of oil has also risen this year and is currently close to its high for the year at USD 82.36 per barrel of Brent. "Oil was supported by reports that the OPEC+ countries could extend their production cuts well into 2024," explains commodities analyst Dora Borbély from DekaBank. Barbara Lambrecht from Commerzbank also points to the growing evidence of continued production cuts by OPEC+. In any case, the organization under the leadership of Saudi Arabia will want to prevent an imminent oversupply on the market. "This means that the Brent price remains well supported at USD 80, at least as long as a premium is paid for the geopolitical risks."
The price of natural gas has fallen significantly this year, having already more than halved in 2023. The futures contract for Dutch natural gas (Dutch TTF), which is relevant for Europe, reached EUR 23/MWh two weeks ago and is currently EUR 26/MWh - last October it was still EUR 55/MWh. According to Puschmann, the triple-leveraged oil short products from WisdomTree (IE00BMTM6C49, IE00BLRPRK35) continue to see high turnover. The leveraged gas price ETCs from WisdomTree, long and short (IE00BLRPRG98, IE00B76BRD76), are also seeing a lot of turnover.
Industrial metals: "The momentum is missing"
Business with industrial metals ETCs is very quiet, with only the WisdomTree Industrial Metals (GB00B15KYG56) and the WisdomTree Copper (GB00B15KXQ89) showing any significant turnover. According to Lambrecht, all eyes are currently on China and the 14th People's Congress. It is important how strongly the country is driving forward the transformation of its energy supply. "For metals, this transformation is one of the 'new' demand drivers." However, the old heavyweights such as the construction sector remain crucial. "And as there is a lack of momentum here in particular, metal prices are unlikely to receive much tailwind."
According to Puschmann, there is currently also a lot going on in a commodity ETF, the iShares Diversified Commodity Swap (IE00BDFL4P12). This tracks the Bloomberg Commodity Index, i.e. futures from the energy, precious and industrial metals, livestock and agricultural commodities sectors. After a strong rise at the beginning of 2022, the ETF lost a lot of ground, but is back to a small gain this year.
By: Anna-Maria Borse, March 7, 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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