Tags: ETF | bullish | gold | physical

ETF Securities: Outlook for Gold Looks 'Robust'

By    |   Friday, 03 May 2013 08:02 AM

Gold has been on a wild ride in recent weeks.

On April 15, spot gold dropped to a two-year low of $1,336.17 an ounce. But since then the precious metal has rebounded 10 percent to $1,475.

London-based investment firm ETF Securities sees room for more gains. "Depressed price levels were perceived as an attractive entry point by physical buyers and bargain hunters," the firm said, according to CNBC.

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"The longer-term fundamental outlook for gold has not changed and appears robust in our view, despite the sharp falls seen in recent weeks."

Gold’s drop to the two-year low stemmed from profit taking, waning fear of inflation and a shift of investor interest to stocks, thanks to the Federal Reserve’s massive easing program, CNBC reports.

So far this year, investors have pulled nearly $11 billion from SPDR Gold Shares, the most popular gold exchange-traded fund.

But physical demand has surfaced to take the place of funds. "Frenzy among coin and jewelry buyers from the U.S. to China and India was behind the recovery of the gold price," according to ETF Securities.

It looks like the gold market may witness a tug of war between bearish gold funds and bullish physical buyers.

"The key question in the near term is whether retail and jewelry demand can continue to counter exchange-traded product [ETP] outflows and the rise in gross shorts," Suki Cooper, a precious metals strategist at Barclays Capital, tells Reuters.

"We continue to believe ETP outflows remain the key downside risk in the near term," Cooper adds.

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Gold has been on a wild ride in recent weeks. On April 15, spot gold dropped to a two-year low of $1,336.17 an ounce. But since then the precious metal has rebounded 10 percent to $1,475.
ETF,bullish,gold,physical
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2013-02-03
Friday, 03 May 2013 08:02 AM
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