Gold Falls Again as Funds Flow out of U.S. ETFs

By Geoffrey Smith

Investing.com — Gold prices fell for the fourth time in five days on Tuesday, with market participants finding better relative value in government bonds against an improving macroeconomic backdrop.

By 11:18 AM ET (1618 GMT), for delivery on the Comex exchange were down 0.5% at $1,543.45 a troy ounce, their lowest in a week. was down 0.3% at $1,542.99 an ounce.

By contrast, U.S. Treasury bond prices were bid up, bringing yields down by two to three basis points along the yield curve after U.S. consumer prices rose by less than expected in December.

Yelena Maleyev, an economist with Grant Thornton, noted that even though the annual CPI print rose to its highest in 18 months, at 2.3%, that was due largely to volatile energy costs. The core CPI rose only 0.1% on the month, creating little incentive for the Federal Reserve to alter its view on price trends.

European government bond yields also fell modestly, with the falling to its lowest in over a month at 0.71% on strengthening expectations of a rate cut at the end of the month from the Bank of England.

However, gold appears to be suffering from a reversal of the panicked portfolio flows into ETFs that followed the assassination of Iranian general Qassem Soleimani earlier in January. ETF data compiled by the World Gold Council showed U.S. gold ETFs have lost 0.9% of their assets under management so far this year, while European ETFs – supported by the lower interest-rate environment in Europe – have added 0.3%. Curiously, Italian gold ETFs stand out from the European trend, having shed 4.5% of their AUM since Jan. 1.

Elsewhere in the metals space Tuesday, fell 1.0% to a three-week low of $17.82 an ounce. rose 0.4% to $986.40.

, meanwhile, ground higher to $2.87 a pound, another eight-month high, as market participants increased their bets that the signing of the U.S.-China phase one trade deal on Wednesday will pave the way for more solid demand from China for the year ahead.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.