Leading gold ETF reports first weekly outflow this year

[LONDON] The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares (GLD), last week experienced its first net weekly outflow this year, data from the ETF showed.

The fund's gold holdings fell by 5.6 tonnes on a net basis to 818.1 tonnes last week, cutting its inflow for the year to 175.7 tonnes, still a highly elevated level. Its last net weekly outflow was in the week to Dec 31.

The decline followed a slide in gold prices to their lowest in more than a month last Monday as uncertainty over the timing of US interest rate increases prompted some buyers to take profits after gold's biggest quarterly price rise in nearly 30 years.

While the latest outflow is small compared with inflows earlier in the year, the reversal should be closely watched for signs that it is turning into a trend, Commerzbank analyst Carsten Fritsch said. "It was certainly a supportive factor for gold demand and for prices (earlier this year)," he said.

The GLD's inflow in the first three months of 2016 was the strongest of any quarter in seven years, mirroring a sharp rally in gold prices.

In the first three months of last year the fund's inflows reached only 28 tonnes.

ETFs, a popular investment vehicle for gold, issue securities backed by physical precious metal. "Inflows and prices go hand in hand - each one influences the other," Natixis analyst Bernard Dahdah said.

REUTERS