Topic of the week: Investors turn their backs on gold price – Commerzbank

“Gold has not been living up to its reputation as an inflation hedge and safe haven in times of crisis of late,” Analysts at Commerzbank Research noted in their latest Commodities Update published on Tuesday.

Additional quotes

“Although inflation rates in the US and Europe are higher than they have been for decades, and have been rising further recently, the gold price has been under selling pressure for weeks.”

“Even the growing concerns about a recession, as evidenced by sharp falls on the stock markets and an inverse yield curve, have not benefited gold.”

“On the contrary, its price even dipped below the $1,700 per troy ounce mark at the end of last week, the first time this has happened in eleven months. What is more, gold has chalked up weekly losses in five consecutive weeks, which has also not been seen in nearly four years.”

“During these five weeks, gold shed almost 9% of its value. More and more disappointed investors are throwing in the towel and jettisoning their gold investments, thereby exerting additional pressure on the price.”

“This is especially visible in the case of gold ETFs: within the past nearly four weeks, 95 tons of gold have been withdrawn from the ETFs tracked by Bloomberg.”

“That’s almost twice as much as the net outflows seen in the entire second quarter. Around two-thirds of the outflows were registered by the world’s largest gold ETF, the SPDR Gold Trust, which is primarily used as an investment vehicle by institutional investors.”