“Investors are now largely focusing on the timing and pace of a possible rate hike in the US, while at the same time risks in the Middle East and the Black Sea region have been fading,” Simona Gambarini, Research Analyst at ETF Securities said.
According to Nicolas Brooks, head of research at ETF Securities, precious metals saw US$263m of outflows last week, with gold (both long and short) and silver ETPs seeing the largest outflows.
“In our view, the price declines are excessive based on our fundamental outlook, with silver, platinum and palladium likely to benefit most if China and US growth continue to recover as we expect. Gold closed just above our estimated all-in cost of production and the widely watched support level near US$1,200/oz,” he said.
The group said, the disappointing economic data from China and Europe also weakened demand for the industrial precious metals, with US$17m flowing out of palladium ETPs.
But, it added, the trades were not all one way, because the price correction attracted bargain hunters into the oil and wheat markets.
“While the strengthening US dollar has weighed on gold in US dollar terms, it has fared much better in Euro terms. We view the current gold price as a very attractive entry point for longer-term investors,” Brooks added.
