Investors were buying into physical gold ETPs ($13m) and ETFS Brent ($26m) as the prices of both commodities dipped in the days before the tragedy in the Ukraine. But with the conflict entering a new phase in the Ukraine, the demand for both commodities is increasing. Alongside the traditional gold asset “haven” fears of restrictive oil supplies amid more aggressive sanctions against Russia are also driving investors.
Meanwhile farther East inflows into ETFS Industrial Metals rose to its highest since inception in 2006, according to ETF Securities. This is mainly driven by China’s successful stimulus that is driving the demand for industrial metals. The ETF provider also expects infrastructure and house building to pick up during the course of the year, which is expected to boost demand for commodities such as industrial metals even higher.
Wheat ETPs also saw inflows across nine consecutive weeks, despite the price falling continually for the most of the period.
“Investors have built positions in the hope that the large surpluses forecasted by the USDA prove to be wrong which could lead to the next price rally,” according to the report.
The price fell as the crisis premium built into wheat fell the past months as it became clear that the Ukraine conflict was not affecting wheat shipments from the Black Sea region. But this could change with recent concerns mounting.
In the week ahead, investors focus remains on the Ukraine. Other signs on the horizon are the US durable goods order statistics, which after a slumping May are expected to have recovered in June. Additionally other signs of returning strength in the US economy are likely to boost industrial metals, according to ETF provider.
