Gold dips below $1300

Gold has dropped to a six-week low after a gold exchange traded fund (ETF) reduced its position in physical gold.

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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.