Abu Dhabi: Gold may come under fresh selling pressure in the week ahead on continued off-loading by Exchange Traded Funds (ETFs) and institutional investors, but, demand from retail investors could put a floor on the prices, experts say.
“The ETF outflows, which are reportedly large and significant so far this year, may not be all what they seem to be. There has been a major change in the pricing structure for gold holdings in unallocated accounts in Switzerland. It has been reported that some Swiss banks have made it more expensive for their customers to hold metal in unallocated accounts than in allocated accounts. The reason for that might be that the banks will have a much higher capital requirement for gold held in unallocated accounts, as they are an on-balance sheet item for the bank,” said Gerhard Schubert, Head of Commodities Wealth Management at Emirates NBD in his latest research note.
He said despite some conflicting data, the trend seems to be of a growing and stronger recovery in the US.
“This will not be positive for the outlook for gold, unless there are inflationary tendencies visible, and we might be years away from that scenario. The current price levels are comfortable, but it seems that our customers are looking to liquidate, at least some of their holdings,” he added.
On Friday, gold prices ended the week trading at $1,464.20 a troy ounce.
Pradeep Unni, Senior Relationship Manager at Dubai-based Richcomm Global Services DMCC said “gold imports by India, the world’s largest consumer, are poised to fall after the central bank restricted overseas purchases by banks to reduce domestic demand and curb a record current-account deficit.”
Banks will be allowed to import bullion on a consignment basis to meet only genuine needs of exporters of gold jewellery, the Reserve Bank of India said in its annual monetary statement.