Gold and silver prices continued their rising streak last week as both metals increased as the situation in Ukraine was showing few signs of stabilising and economic data from China coming in softer-than-expected.
Investors tilted their portfolios in favour of silver, likely because of expected leveraged moves relative to the gold price say ETF Securities in this weeks ETP Commodity Weekly from ETF Securities.
ETFS Physical Silver last week saw inflows reach the second highest in five months as they hit the $38m mark. The strong inflows last week follow on the $132m three weeks ago. Investors are increasingly allocating to silver as it has traditionally outperformed gold when both are rising.
Silver at gold's heels
So far this year gold has returned 13.6% while silver has returned 8.9%, highlighting the potential for silver to catch up. Long gold ETPs saw $67m of outflows as some investors chose to take profits on recent price gains.
Long copper ETPs have seen $19m of inflows which is the highest in 10 weeks as an 8.9% drop was viewed as a buying opportunity according to ETF Securities. The provider suggests the main trigger for the price slump was a corporate bond default that raised concerns about a possible unwinding of copper collateralised financing deals that some feared would release copper stockpiles into the market.
Weaker-than-expected China export and growth numbers and a fall in the Chinese renminbi added to the negative sentiment. Investors appear to looking beyond the near-term turbulence, which has been driven by the government’s efforts to introduce healthy two-way risk into the market.
China’s copper demand in fact remains robust. Imports for January and February are up over 40% on a year earlier, with January imports reaching record levels. Demand generally picks up after the end of Q1, and analysts at ETF Securities expect a similar pattern will be followed this year.
ETFS Aluminium also had a great week last week and has seen the largest inflows since August last year. Flows into ETFS aluminium ETPs rose $9m as the price of aluminium fell by 3%.
Keep an eye out for coverage of next week's FOMC meeting – the first chaired by Janet Yellen.
Analysts reckon there could be a catalyst to platinum group prices which treaded water last week if EU car registration data continues to rise as it has in the past five months.
