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Gold ETF’s are continuing to fall and the Fed is quite happy to see bond yields rise as a reflection of a more optimistic outlook. Rising yields are a natural drag on gold and as the US economy gets going those expectations of better times are only going to increase and put further pressure on gold. This is reflected in the bad start for gold around the start of this year. It has been one of the worse starts for 20 years. Usually, the start of the year is a strong time of demand for gold as the Chinese Lunar New year attracts gold buyers.

XAU

ETF demand just keeps falling

The bad start of the year for gold is also reflected in the falling ETF levels. Remember that gold ETFs tend to trend, funds have a lot to get rid of, and ETFs tend to have a decent impact on spot prices So, falling levels of exchange-traded funds impacts the gold prices. This is also in start contrast to the rise in gold ETFs that we saw last year which was instrumental in supporting gold prices.

ETF

From a seasonal perspective gold’s strong time of the year has passed. In the last 10 years, gold has been flat between April and June, but there are definitely bearish factors above that can weigh on prices. So, taking a balance off factors would mean it is sensible to look for key areas to short gold from as long as these factors remain.

Gold


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