Gold Price Forecast: XAU/USD ETF Holdings Continue to Buoy Outlook

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GOLD & SILVER PRICE FORECAST:

Total known gold ETF holdings jumped another 880,000 troy ounces during the week, despite a -0.5% decline in spot gold prices

Similarly, silver holdings increased by 7.1 million troy ounces as XAGUSD spot prices climbed 3% higher

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GOLD & SILVER PRICE FORECAST: XAU/USD, XAG/USD ETF HOLDINGS CONTINUE TO BUOY OUTLOOK

Last week I highlighted a bigger-picture view of the explosive demand for gold and silver via exchange traded funds, which has assisted in their 18.5% and 17.6% respective returns in the year-to-date. While spot gold prices suffered slightly alongside an uptick in risk assets like the Dow Jones and S&P 500, total known ETF holdings for XAUUSD continued to climb, jumping another 880,000 troy ounces during the week.

GOLD & SILVER HOLDINGS CONTINUE HIGHER

Similarly, holdings of silver spiked 7.1 million troy ounces alongside a 3% jump in XAGUSD spot prices. The continued demand for gold and silver speaks to the favorable fundamental conditions which have bolstered the price outlook for both XAUUSD and XAGUSD in the medium term. Trade war uncertainty, recession fears, slowing global growth and dovish monetary policy are some of the more important fundamental tailwinds that have spurred demand up to this point, but geopolitical risks continue to mount.

A possible debt default in Argentina, ongoing protests in Hong Kong and a looming Brexit deadline are all developments that could spark further demand for a safe store of value – which gold provides. Recent buying is echoed in fund flows to the GLD ETF which registered $1 billion in net inflows this week alone. Consequently, the 2019 total stands at $4.5 billion in net inflows for the fund. Further still, GLD has only posted four sessions in which net outflows were witnessed during the month of August.

GOLD GLIMMERS

That said, the increase in gold ownership has undeniably surged in 2019. Using the 7.2 million troy ounce increase from January 1 to August 30 and the average spot price of $1,348 from the same span, the added holdings equate to nearly $9.7 billion. Given the shift higher in spot pricing and greater ownership, the total value added in 2019 is about $1.3 billion higher than last week.

SILVER SHINES

As is frequently expected of the less-luxurious metal, silver lags behind with an additional $1.7 billion added to total holdings in the year-to-date – up just $100 million from last week. Nevertheless, both metals should continue to enjoy an optimistic outlook for the months ahead with the flurry of uncertainty across the globe and in financial markets. In the short-term, however, a slight drop in gold volatility could signal coming weakness. For more ETF data on gold, silver and various equities, follow @PeterHanksFX on Twitter.

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