UBS: Signs that global gold ETFs stabilize "encouraging"

UBS: Signs that global gold ETFs stabilize "encouraging"

2 September 2015, 16:33
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UBS found some signs that global gold holdings of exchange-traded funds are stabilizing. 

ETFs rose by 166,000 ounces in August, much of it in the second half of the month. So far for the year, global holdings are down by 4% or 2.09 million ounces.

However, the decline is less sharp than full-year outflows of 9%, or 5.24 million ounces, in 2014.

“Further signs of stabilization in gold ETF holdings so far this year are encouraging,” UBS says. 

This implies that while some adjustments may be needed when the Fed starts to hike, the bulk of the fine-tuning has likely already happened.

“The aggressive liquidations two years ago were likely dominated by investors who were looking to reduce or exit long-term gold positions that were initially put on in light of the Fed's QE (quantitative easing).”

After that, gold ETFs have seen more two-way traffic, particularly so far in 2015.

These swings suggest that "while there are those who are continuing to refine their gold exposures, there are also others that are once again starting to get attracted by gold's long-term value proposition,” UBS says.