The fact that investors are
siphoning money out of stocks is not helping gold, with the safe-haven asset
suffering as people wary of a global trade war flock to the U.S. dollar.
U.S. fund investors pulled
$1 billion from commodity funds, including those invested in the precious
metal, the largest withdrawals since July 2017, Investment Company Institute
(ICI) data showed on Wednesday.
Data from Thomson Reuters'
Lipper research unit last week showed precious metals commodities funds posted
nine consecutive weeks of withdrawals, with $2 billion pouring out in June
alone, the most since December 2016.
Indeed, trade is unlikely to
fade in importance to investors. Washington on Tuesday issued a list of
thousands of Chinese imports that the Trump administration wants to target with
new tariffs. In response, China accused the United States of bullying and warned
it would hit back.
William Rhind, chief
executive officer at fund manager GraniteShares Inc, said a trade war could
eventually generate inflation that will benefit gold.
"At the moment, the
positive inflationary pressures caused by trade tariffs are being beaten back
by dollar strength," said Rhind.
"As the tariffs take
hold and the market adjusts to the effects, we expect inflationary pressures to
increase, which will benefit holders of gold and commodities."
Some $10.6 billion rolled
out of U.S.-based stock mutual funds and exchange-traded funds (ETFs) during
the most recent week, ICI said, bringing three-week withdrawals to $33.7
billion. The data covers the six days through July 3; the United States
observed the Independence Day holiday on July 4.
A subset of equity funds
specifically focused on international shares managed to pull in $762 million,
their first week of positive sales in the past four, the trade group said.
Bond funds attracted $4.6
billion in the latest week, according to the data. U.S.-based debt funds have
not seen withdrawals since February.
here for the original article from Nasdaq.