John J Hardy
Saxo Bank’s head of FX strategy John Hardy takes a closer look at trends and moves in today’s forex charts, including EURUSD, USDJPY, AUDUSD, and EURSEK.
Article / 27 October 2014 at 11:16 GMT

ETP update: Gold holdings at five-year low

Head of Commodity Strategy / Saxo Bank
  • ETP investors take opportunity to reduce exposure
  • SNB gets stuck into Swiss referendum
  • Doubt over gold's upside potential

By Ole Hansen

Total holdings in exchange traded products backed by physical gold dropped to a new five-year low last week. With one week of October still left we could be on track to see the largest monthly reduction since last December's. Silver, meanwhile, saw the first increase in three, following two weeks of sharp reductions. 

ETP Holdings

Source: Bloomberg and Saxo Bank

Total holdings in gold ETPs dropped to 1654 tons, as of last Friday. Such a low level was last seen in September 2009 when gold was trading around 980 USD/oz. While hedge funds have been scaling back short positions in futures over the past couple of weeks, investors in ETPs have taken the opportunity during the recent rally to reduce exposure further. 

The expectations for a continued rally in the dollar, the ending of QE in the US this week and a general benign outlook for inflation have left many investors in doubt about the current upside potential for gold. 

The first poll in the Swiss referendum gave the "Yes" campaign 44% against 36% saying "No". This will increase the attention in the market ahead of the vote on November 30. However, the view is that both the government and SNB will now launch a strong information campaign against which leaves the chance of a "Yes" reduced.

Gold held in ETP's

Source: Bloomberg and Saxo Bank

Total holdings in silver ETPs reached a record on October 2 but as of last Friday, this had been reduced by 1.7% or 340 tons. ETP investors have remained very loyal to the metal despite all the headwinds witnessed over the past couple of years during which time the price has more than halved.

Silver held in ETP's
 Source: Bloomberg and Saxo Bank

-- Edited by Kevin McIndoe

Ole Hansen is head of commodity strategy at Saxo Bank.


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