WSJ piece mentioning 673.4 metric tons of gold in a gold ETF .................................
I am not positive that "SPDR Gold Shares" is the same old ETF that seems to be the big one.
The 1/5/08 post that I am replying to ... talked about the "streetTracks Gold Shares ETF."
Jon.
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July 31, 2008
Gold, at $902.90, Continues to Pull Back
By CAROLYN CUI
Gold's attempt to revisit the grand four-digit level is running into obstacles.
Over the past two weeks, the yellow metal had a headlong plunge, falling 7.6% from its recent peak. Nearby August futures settled at $902.90 per troy ounce, down 1.5%, on Wednesday at the Comex division of the New York Mercantile Exchange.
Gold's about-face underscores how rapid the sentiment has changed among market investors in recent weeks.
A drop in oil prices has helped calm rampant inflation concerns. Some improving sentiment about the state of the U.S. economy, meanwhile, has supported the dollar, which got an additional boost from the Federal Reserve's decision Wednesday to extend loans to investment banks into 2009.
The dollar rose to a five-week high against the euro for the second consecutive session. Dollar-denominated gold typically moves in an inverse direction to the U.S. currency.
In a sign of waning demand, SPDR Gold Shares, the world's largest gold exchange-traded fund, saw an outflow of 32.5 metric tons, or 4.6%, from its highs, to 673.4 metric tons as of Tuesday. Fund outflow indicates that investors are redeeming their shares in the gold fund.
"It certainly followed the dollar and oil, which were very influencing," said Leonard Kaplan, president of Prospector Asset Management. Funds have been liquidating their positions in gold, and it will face more downward pressure as the commodity bull-run loses its steam, he said.
Gold's sudden reversal has left analysts divided about the yellow metal's outlook. What happened to gold is in line with "the general selloff of commodities," said Joseph Foster, portfolio manager of the Van Eck International Investors Gold Fund. Gold has shown more resilience compared with oil, he said, which is now down 12.7% from a record settlement on July 3.
Some analysts say the fundamental forces that have driven gold up remain intact. For the second quarter, mine production remained tight, while consumption isn't expected to have fallen as much as in the first quarter, said Natalie Dempster, head of investment at the World Gold Council's North American operations. Global demand for gold fell 16% in the first three months of the year, according to the council.
Gold tends to be a darling of investors in times of uncertainty. Early this month, when problems with Freddie Mac and Fannie Mae triggered fears of the credit crisis, jittery investors rushed to safe-haven plays like gold. It has also been helped by rising inflation all over the world, as gold is regarded as a store of value.
In other commodity markets:
CRUDE OIL: Futures rebounded Wednesday as an unexpected, 3.5 million-barrel drawdown in gasoline stocks for the week ended July 25 highlighted the resilience of U.S. demand. Analysts surveyed by Dow Jones had forecast a modest build in gasoline stocks of 200,000 barrels. Light, sweet crude for September delivery settled up $4.58, or 3.75%, at $126.77 a barrel on the Nymex. Oil is now up 32% on the year and 66% from 52 weeks ago, but down 13% from its record close of $145.29.
SUGAR: Prices on the ICE Futures U.S. exchange climbed as speculative funds re-entered the market and bought sugar. Higher crude-oil futures also added to the upward flow. October futures rose 0.58 cent to 13.40 cents a pound.
Write to Carolyn Cui at carolyn.cui@wsj.com
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