Interestingly, gold held by funds in LBMA vaults accounts for almost four-tenths of all the precious metals.
The recent research report published by Bank of America (BoA) states that rising investor demand into gold-backed exchange traded funds (ETFs) plays a key role in driving gold prices.
According to Michael Widmer, commodity strategist at BoA, the investment demand in gold ETFs surged higher by 646 tonnes, hitting fresh peak during the initial six-month period of the current year. The assets under management in gold-backed ETFs have almost doubled over the past four years. Interestingly, gold held by funds in LBMA vaults accounts for almost four-tenths of all the precious metals.
Meantime, Commerzbank noted that the recent fall in gold prices was primarily triggered by rising U.S. dollar and that the gold market recovery looks imminent, especially due to positive environment for precious metals. The withdrawal of speculators from the market should result in boost in gold prices. In addition, the U.S. dollar is most likely to run out of steam in the coming days, said Carsten Fritsch, commodity analyst, Commerzbank.
UBS also maintained the view that the recent pullback in gold prices was a temporary correction and that it is set to rally to higher levels. The possibility of a contested election outcome could add further economic crisis, which in turn may boost flows into safe-haven gold asset, said Mark Haefele, chief investment officer, UBS.
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