Precious Metals Preview: Gold Sees Steady Fund Flows

COMEX Gold recovered in intraday moves yesterday. The commodity started on a soft note amid broad dollar strength as the US Dollar Index soared to a fresh 2 week of 96.50, rising for sixth consecutive session. The yellow metal cut losses on signs of steady fund buying though. Weak equities also supported the metal. The COMEX Gold futures currently trade flat at $ 1313 per ounce. MCX Gold futures closed at Rs 33139 per 10 grams, down 0.50% on the day as the INR hit a one week high of 71.30 per US dollar.

The World Gold Council (WGC) noted in a latest update that the holdings in global gold-backed ETFs and similar products rose in January by 72 tonnes (t) to 2,513t, equivalent to US$ 3.1bn in inflows, marking the fourth consecutive month of net inflows. Notably, total holdings have not been this high since March 2013, when the price of gold was 22% higher. Global gold-backed ETF holdings have grown 6% over the past two months, driven by market uncertainty and a shift in sentiment that drove the price of gold 3.5% higher in January alone.

Global assets under management (AUM) rose by 6% in US dollars to US$ 107bn over the month. North American inflows represented 72% of global inflows. North American funds had inflows of 53t (US$ 2.2bn, 4.0% AUM) while holdings in European funds rose by 20t (US$ 902mn, 1.9%). The funds listed in Asia increased by 0.1t (US$ 3mn, 0.1%) while other regions saw a decrease in holdings of 1.3t (US$ 62mn, 4.6%).