Gold Drops On ETF Sales and Strong USD

Gold fell to a two-and-a-half-week low in choppy and thin holiday trade on Monday, hurt by sharp outflows from the world’s biggest bullion-backed exchange-traded fund (ETF) and a stronger dollar.

The metal was also impacted by a spurt of technical selling after it was unable to hold on to the $1,300-an-ounce level hit early in the trading session. Spot gold fell to a two-and-a-half-week low of $1,281.40, before pruning the losses to trade down 0.7 percent at $1,284.

Gold Trust, the world’s top gold ETF and a good measure of investor sentiment, saw outflows of 9.3 tonnes last week. Before last week, the fund – closely watched due to the size of its holdings – had gained 6.2 tonnes from the beginning of 2014. Last year, huge outflows from the fund were partly responsible for the 28 percent drop in gold’s price. Investors shifted money to better-performing equities as the U.S. Federal Reserve began to unwind its monetary stimulus.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza