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Gold and oil ETFs see inflows


Flows into gold and WTI oil ETFs/ETPs have resumed says Aneeka Gupta, Associate – Equity and Commodities Strategist, ETF Securities. 

“Gold prices caught a fresh bid after a more cautious policy trajectory was inferred from Fed chair Yellen’s comments early in the week boosting inflows into gold ETPs by USD96.7 million. Furthermore, the Fed Chair remained unsure of the durability of the recent spike in inflation reinforcing a more gradual rate normalisation path in the US.
“However we believe the positive beat in payrolls data provides evidence of economic resilience that could allow the Federal Reserve to raise interest rates more often than projected, thereby avoiding a policy error. Silver ETPs also benefited in Gold’s slipstream recording inflows for the sixth consecutive week worth USD9.2 million.”
Gupta adds that energy ETPs attracted strong inflows, led by WTI crude oil.
“After four consecutive weeks of outflows, WTI crude oil ETPs received positive inflows worth USD19.9 million. This is reflective of declining US crude oil production for the fourth month in a row. We expect this decline to continue since drilling activity has been lacklustre with 30 per cent active oil rigs idled over the past 14 weeks. On the other hand oil production by OPEC has risen by 100,000 barrels per day in March owing to Iran and Iraq.
“The precondition laid out by Saudi Arabia to freeze output subject to Iran and other major producers following suit is casting doubts on the ability of these nations to reach an agreement at the next Doha meeting scheduled on April 17. We expect oil prices to trade a volatile range on the back of acrimonious decision making over the capping of oil production limits by OPEC though declining US oil production may help alleviate sharp price drops.”

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