SPDR Gold Shares (NYSEArca:GLD), the second-largest U.S.-listed
ETF, with some $75 billion in assets, slid 1.5 percent on
Wednesday, the most in more than three weeks, amid crosscurrents of
sentiment that made the yellow metal vulnerable.
The move, which pulled GLD down to $166.50 a share, materialized
in gold futures markets, and was possibly linked to selling by a
U.S. bank, according to a report on ForexPros.com. No confirmation
of the report's claim was immediately available.
Stocks started the day sharply lower, but retraced all their
losses and then some on news from Washington, D.C., that
legislators may be making progress in solving issues related to the
looming U.S. "fiscal cliff." The Dow Jones industrial average was
up more than 100 points, or 0.77 percent, to 12,977.26 ahead of the
Notwithstanding Wednesday's sizable sell-off, demand for gold
has been on the rise amid market volatility surrounding the fiscal
cliff-shorthand for the expiration at the end of the year of Bush
and Obama tax cuts as well as the implementation of spending
cuts-which many fear may ruin the recovery.
Markets are also again on tenterhooks in connection with talks
about debt restructuring in Europe, with both factors sending
investors to the refuge of gold.
Total gold ETF holdings rose to 83.8 million troy ounces, or
more than 2,600 tonnes, earlier this week-a fresh record high,
according to several reports. GLD's holdings hit a record 1,346
Gold prices slipped some 2 percent right off the bat in early
like GLD-the largest physical bullion-backed ETF-and the iShares
Gold Trust (NYSEArca:IAU) tracked the futures move precisely,
exactly as they should.
"GLD or gold ETFs in general, haven't been significant downside
drivers of gold prices, as the holders of these funds tend to be
long-term investors, not speculative traders," Sumit Roy, analyst
with HardAssetsInvestor, told IndexUniverse.
According to Roy, other factors were likely at play in
Wednesday's gold sell-off such as simple profit-taking after what
has been a solid run-up in recent weeks.
Moreover, Roy pointed out that the slow progress in the
negotiations to avert the so-called fiscal cliff has "dampened
investor appetite for commodities in general."
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