Dubai PR Network, Online Press Release from Dubai and Middle East
 
Business, Banking and Investments(Banking & Investments)
Filter PR by
  
Global Metals Weekly: Trading Dislocations in Gold
 
United Arab Emirates,  September 23, 2020
 
 
Key takeaways 
 
•         Investors remain key gold price drivers; epicentre has shifted from futures to physically backed ETFs.
•         Retail investors are critical. Given extremely high inflows, there were some dislocations earlier this year.
•         EFPs also spiked, but quotes have subsided. Return of the popular short EFP trade.
 
 
Investors remain the gold price drivers
 
The recent gold price rally has been driven by investors, who have steadily increased their exposure to the yellow metal, a dynamic that is, as such, not unusual. Digging a bit deeper, positioning through futures was historically the marginal price driver. Yet, physically backed ETFs have increasingly become the vehicle of choice to access the gold market. Indeed, squaring off futures with physically backed ETFs, recent flow data suggests that paper gold is no longer as important as it used to be.
 
ETFs are the dominant vehicle to access the gold market
 
To put assets under management at physically backed ETFs into context, these vehicles now hold the equivalent of 40% of gold stored in LBMA vaults. Given that most of the ETF holdings are sticky, this has removed some liquidity from the gold market. Looking into market participants, investment advisors, which typically represent retail investors, remain by far the single biggest holders of exchange traded funds at 71%. As such, while institutional investors, who in the past often traded futures, have a share in combined futures and ETF open interest, retail investors, typically through physically backed ETFs, are now more critical. Linked to that, significant inflows into exchange-traded funds showed up in periodic dislocations between ETF prices and NAVs over the summer, although these have by now normalised.
 
EFP quotes are normalising
 
Dislocations also showed up in exchange-for-physicals (EFP), which are, essentially, a market-neutral position in a CME futures contract and OTC physical gold. During the lockdowns, logistical challenges and concerns over liquidity on CME meant that EFPs spiked. Since then, steady gold deliveries into the exchange's warehouses mean that trading on CME has started to normalise; incidentally, these shipments along with extremely high inflows into ETFs at some stage raised concerns over the health of the physical gold market. Putting it all together, with dislocations now having subsided, and there is scope for the popular short EFP trade to make a return.
 


Posted by : Dubai PR Network Editorial Team
Viewed 2129 times
PR Category : Banking & Investments
Posted on : Wednesday, September 23, 2020  12:08:00 PM UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of DubaiPRNetwork.com.
Previous Story : Kantar to Launch the First BrandZ Top 30 Most Valuable Emira...
Next Story : Global Energy Weekly: OPEC+ Stands Shoulder to Shoulder in ...
Email this article Print this article

Share this article with your friends and followers
NewsVine
Back to Section Home

Related Stories



 
 
Most Viewed Press Release posted in the last 7 days
Global Private Wealth Holders Set to Almost Double Impact Investing Allocation Over Next ... [5109-Views]
Stunning Depth Haute Joaillerie Collection 2020 [4301-Views]
My Review Of Laser Treatment And Spider Veins [4182-Views]
WTTC Recognises Saudi Arabia's Leadership to the Recovery of the Travel & Tourism Sector G... [3821-Views]
Consumers Expect All Brands to Provide Wellness Offerings, New Ogilvy Study Finds [3177-Views]
Vatika Launches Awareness Campaign to Address Hair Fall Through a 3 Step Haircare Regimen ... [3132-Views]
Tissot Heritage Navigator Chrono Auto 1973 The True Spirit of Classic Racing [3022-Views]
Mohammed Bin Rashid Global Centre for Endowment Consultancy (MBRGCEC) Awards Union Coop th... [3013-Views]
Younger Saudi Healthcare Professionals Are Enthusiastic Adopters of New Technology, Accord... [2722-Views]
Code 11.59 by Audemars Piguet Grande Sonnerie Carillon Supersonnerie [2677-Views]
On The Hunt for Firmer, Younger Looking Skin? [2657-Views]
Dubai Diabetes Centre Explores Telemonitoring for Diabetics [2612-Views]
DP World, UAE Region Tackles Key Industry Challenges and Opportunities [2517-Views]
Dubai International Financial Centre Grand Mosque Welcomes Worshippers [2419-Views]
Good News for Al Quoz Residents – Union Coop's ‘Coop' Concept is Opening Soon [2411-Views]
Tightening Supply Keeps Grain Sector Supported [2321-Views]
Dubai Sports Council Invites Registered Participants for Al Marmoom Dune Run ‘build-up' Ru... [2312-Views]
Saudi's International Medical Center Wins the International CHIME 2020 Digital Health Most... [2239-Views]
Airbus Delivers A320 Family MSN10,000 to Middle East Airlines [2194-Views]
du Announces Pre-Orders for iPhone 12 Pro and iPhone 12 Pro with 5G [2136-Views]
Marina Rinaldi – Pre-Fall 2020 “Call Me” [2083-Views]
Euisun Chung Inaugurated as Chairman of Hyundai Motor Group, Opening a New Chapter in Hist... [2083-Views]
Samsung Announces Availability of the Galaxy S20 FE Across the UAE [2058-Views]
Danube Home Launches Its Bigger and Better Online Shopping Platform! [2038-Views]
Hyundai Launches Its All-new and More Powerful CRETA Vehicle in Select Markets in Middle E... [1997-Views]
 
RSS Facebook Twitter LinkedDin
 
Top Sections
 
Top Stories