FOCUS – Gold price remains fragile, ETF outflows continue – BarCap

London 01/11/2013 – Holdings in gold-backed exchange-traded products (ETPs) have resumed their downward trend despite last week’s largest daily increase in holdings since January, Barclays Capital said.

Net redemptions of 47 tonnes since then – exceeding the outflows of the previous two months – have pushed total metal held in trust to its lowest since May 2010, it said in a report on Friday.

In the wake of the US Federal Open Market Committee’s meeting this week – at which it delivered a policy statement that closely mirrored previous communications and maintained the pace of its bond-buying programme, currently worth $85 billion per month – gold has come under pressure while the dollar strengthened to two-week highs against the euro.

Gold prices were last at $1,313.35/1,314.20 per ounce, having drifted as low as $1,306.15 earlier.

“The floor for gold prices remains fragile, particularly in light of the weaker-than-normal seasonal buying in India,” the report said.

Although the festival season – an auspicious time for Indians to buy gold – is under way, there are reports out of the country of sluggish demand for the yellow metal, with diamond, silver and lighter gold jewellery proving more popular.

“Local dealers have cited tighter regulation as the driving force behind subdued demand and the shortage of metal pushing local premiums higher,” the bank said.

(Editing by Mark Shaw)