Jan-March 2013 the weakest quarter for gold ETP inflow

The period between January – March 2013 was the weakest quarter on record for gold exchange traded product (ETP) flows, Barclays Capital said in a report.

The quarter under consideration witnessed a hefty outflow across the gold ETP, which slowed later. Preliminary full month data for March shows that ETP holdings fell by 45 tonnes with outflows of 154 tonnes in Q1, 2013, unsurprisingly the weakest quarter on record, tripling the previous weakest quarter registered in Q1, 2011 (-50 tonnes) and in stark contrast to Q1, 2012 with inflows of 71 tonnes. Total metal held in trust rests at 2606 tonnes, 13.55% lower from its peak, valued at $134.5 billion against the peak level of $155bn.

Tactical investors scaled back exposure to Comex gold during the week ended 26 March as long liquidation (-8.5k lots) offset short covering activity (5.3k lots). Gross shorts have now fallen to six-week lows while gross longs continue to hover around the 200k lots mark, a level positioning has fluctuated around since last August ahead of the QE3 announcement.

Preliminary US Mint data show that gold coin sales reached 62koz in March, down 1% y-o-y and 23% m-o-m. Sales for the year-to-date have reached 292.5koz compared to 210.5koz. Retail demand for gold has been healthier than ETP flows and speculative positioning.

Meanwhile, gold prices continue to hover around the $1600/oz level, but prices have struggled to gain traction after the initial safe-haven bid following the events in Cyprus. Barclays expects prices to remain range-bound finding support from the physical market and central bank buying on the downside in the near term, but gold still misses a catalyst for significant upward momentum. For the first quarter of the current calendar year, Barclays had forecast average gold price at $1630 an oz while for the full year, however, the yellow metal to average at $1646 an oz.