Gold was attempting a comeback of sorts in Asian trading on Monday despite relentless selling by physically-backed gold ETF investors since Donald Trump’s victory in US presidential elections.
Gold for delivery in February reached a session high of $1,200.00 an ounce, up nearly $20 or 1.6% an ounce from Friday’s closing price on the Comex market in New York. Gold is still down 10% or $140 an ounce after an initial surge following Trump’s win. On Friday gold fell to its lowest level since February.
Gold bears are making big bets that Trump’s plans for fiscal stimulus, including a $500 billion infrastructure spending program, will lead to strong US economic expansion, higher interest rates and a stronger dollar.
These are all negatives for the gold price and hedge funds, institutions and retail investors have been dumping gold as a result.
Since the election investors in top physical gold-backed exchange traded fund – SPDR Gold Shares (NYSEARCA: GLD) – have redeemed a net 64.7 tonnes (buying on the Wednesday after the election, but offloading 70 tonnes since then).
GLD, which dwarfs other physically-backed gold ETFs with a more than 45% global share, now holds 885.6 tonnes or just over 28.5 million ounces; worth $33.7 billion on Friday. That’s down $5.4 billion since the surprise victory of the billionaire property tycoon.
On August 22, 2011 when gold was hitting record highs above $1,900 an ounce GLD became the largest ETF in the world briefly surpassing the venerable SPDR S&P 500 trust at a net asset value of $77.5 billion. Gold holdings in the trust would peak more than a year later in December 2012 at 1,353 tonnes or 43.5 million ounces.