Gold ETF investors liquidated 175 tonnes in the first quarter of the year representing the largest level of net quarterly outflows since Q4 2013, according to Refinitiv Metals Research.
It was also the second consecutive quarter of net outflows (with net selling of 75 tonnes being reported in Q4 2020). This compares to net inflows of over 300 tonnes seen in the first quarter of last year.
This was largely a reflection of a shift in investor sentiment towards gold since the beginning of the year, with gold being pressured by the firm US dollar, rising US Treasury yields, and growing enthusiasm around economic recovery amidst the ongoing rollout of vaccination programmes.
Following a spectacular performance in 2020, when we saw gold appreciate by 27%, touching a fresh all-time high in early August, the beginning of this year hasn’t been as rosy as some may have expected. With the growing optimism around economic recovery in light of the ongoing rollout of vaccination programmes and stimulus measures introduced by central banks and governments, gold came under significant pressure, correcting by 13% during the first three months of the year, and trading at near nine-month low at the end of March.
Gold averaged $1,794/oz in the first quarter, down by 4% from the previous three months, but still some 13% above the level seen over the same period of last year. The firm forecast gold to average $1,764/oz in 2021.
Saida Litosh, Lead Analyst at Refinitiv Metals Research, commented: “Looking ahead the broader macroeconomic backdrop remains favourable for gold. We believe that gold will continue to benefit from ongoing concerns around the economic uncertainty, increased debt levels, negative interest rates, and currency stability amidst unprecedented levels of stimulus measures launched by central banks and governments around the globe.”