Gold is trading at $1296, down 0.5%, after SPDR Gold Trust, the largest gold ETF in the world, disposed of 1.8 tonnes of gold, bringing its position to 816.97 tonnes. An ETF is essentially a fund where investors pool their cash and invest in an asset; SPDR Gold Trust invests its client’s funds in physical gold.
The precious metal had been coming under pressure since last week, after the Federal Reserve hinted it could increase interest rates a few months after quantitative easing came to an end. The fear that central banks around the world may no longer be buying gold prompted a selloff in the metal.
A number of gold ETFs have been reducing their positions in physical gold over the past 12-months. Speculators have been jumping on the back of this as they hope to capitalise from the downward wave.
Gold is currently below the 200-day moving average of $1298; this is a bearish signal. If other gold ETFs dispose of large holdings, we could head towards the 100-DMA of $1274.