Investors cut holdings in exchange-traded funds (ETFs) for silver, platinum and palladium in the second quarter on fears that a potential recession would reduce industrial demand, but gold assets held up because of its role as a haven, and that might persist.
Gold-backed ETFs shrank by just more than 1 percent in the three months through last month, after an 8 percent surge in the first quarter helped by Russia’s invasion of Ukraine, data compiled by Bloomberg sowed.
By contrast, silver holdings contracted almost 5 percent, and the outflow in tonnage terms was the biggest since 2011.
Photo: Reuters
The amount in gold ETFs is the lowest since March, while assets in the other three precious metals are around the smallest since 2020.
Gold has held up well relative to silver and platinum. One ounce of gold now buys 90 ounces of silver, the most in almost two years.
The resilience of gold offers yet more evidence to support its role as a component in portfolio asset allocation, in contrast to silver, platinum and palladium, which have more industrial uses and are therefore more exposed to economic downturns, ETF Securities senior business development manager Chad Hitzeman said.
“Where broader markets remain negative, pressured by inflation and central bank hawkishness in taming prices, we see investors holding fast to gold ETFs as a risk-off haven,” said Hitzeman, whose company offers several precious metals products to investors.
Giovanni Staunovo, a strategist at UBS Group AG’s wealth management unit, shared this sentiment.
“If market recession fears are increasing, you prefer to hold exposure to gold and not to the white metals, which have a high industrial usage,” he said.
Gold for August delivery fell US$5.80 to US$1,801.50 an ounce on Friday, down 1.57 percent from a week earlier.
Silver for September delivery fell US$0.68 to US$19.67 an ounce, plunging 6.9 percent weekly, while September copper fell US$0.11 to US$3.60 a pound, posting a weekly decline of 3.74 percent.
Additional reporting by AP
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