Gold price rises despite strong ETF outflows
by Commerzbank Commodity ResearchGold is holding its own at above the $1,600 per troy ounce mark on the back of continuing uncertainties over Cyprus. Now that the debate and subsequent vote on the law to tax bank deposits, originally scheduled for yesterday, have been delayed, it appears increasingly unlikely that a majority in the Cypriot parliament will vote in favour of the controversial law. For as long as there is a lack of clarity in this context, and especially if the situation should escalate, gold should continue to remain in high demand as a safe haven. What is more, the yellow precious metal appears to be immune to the latest outflows from the ETFs. The gold ETFs tracked by Bloomberg recorded outflows of more than 18 tons yesterday, their highest daily outflow since the end of February. Since the start of the year, outflows have thus totalled over 180 tons. This means that in the first 2½ months of this year alone the gold ETFs have seen outflows of nearly two thirds of the holdings which, according to the WGC’s data, were built up in the whole of last year. Evidently the ETF outflows are being offset by strong physical demand elsewhere. In our opinion, the gold price should continue to gain ground.