A week in gold: Flat after volatile few days

Ukraine ceasefire talks dollar gains and a revival in the oil price has seen the gold price reverse most of its gains this year.

Uncertainty over Greece prompted some safe haven interest but by Thursday investors had also started to price in a compromise between the new Greek government and the Eurozone.

Some exchange traded funds saw their holdings decline though there was a small gain overall according to UBS.

Gold ETF holdings were up 0.20moz to 57.54moz in the week to 11 February with SPDR Trust the largest of the gold-backed funds seeing inflows

SPDR contains 173000 oz the ETFs (LSE) fund (36000oz) the db Physical Gold Euro Hedged fund (27000oz) the GBS (LSE) fund (16000oz) and the UBS fund (15000oz). 

Holdings fell though in the New Gold (JSE) fund and the Source fund UBS said. 

“ETF flows in the weeks and months ahead should help gauge investor sentiment given the US$90 correction from the January highs and as market refocuses on the US and the Fed” added the broker.

Absent this year so far has the surge in consumer buying especially in China which characterised the start of the 2014.

This week’s summation of last year from the World God Council confirmed that Chinese interest fell off sharply after that early spurt.

Indeed India regained the number one spot with 842.7 tonnes of gold purchased in 2014 or 26% of global consumption compared to China's 813.6 tonnes. 

Overall gold demand fell by 4% driven by notable declines in demand for physical bars coins and jewellery even though there was a 19% gain in jewellery consumption out of India last year. 

UBS added that India’s resurgence was not a surprise as this year the local market had much better adapted to the regulatory changes made in 2013 to improve the balance of payments situation.

The WGC estimated unofficial flows to India were around 175 tonnes against 200 tonnes in 2013. 

Elsewhere an interest rate cut and QE plans by the Swedish government were another step towards a global devaluation race between currencies said Commerzbank.

The broker said this should be good for gold.

“The ECB has already announced government bond purchases and the Japanese central bank has already been making such purchases for quite some time. 

“What is more interest rates have also been cut recently in Canada Australia and Switzerland among other places.”

An hour in to trading on Wall Street Friday gold was trading at US$1230 or little changed on the week.