23/01/25 12:03:58

Commodities: Gold ETCs sold too early

In 2024, outflows from gold ETCs continued, while the price rose sharply. Gold price trackers are now doing well again - despite (almost) record-high prices. The slightly higher oil and industrial metal prices, on the other hand, are leading to profit-taking.


23 January 2025 FRANKFURT (Frankfurt Stock Exchange). Not only gold, but also gold ETCs are in demand as a “safe haven” - in any case, the new year is starting with high inflows. “Investors are looking for the stability of gold due to concerns about a possible trade war,” explains Mobeen Tahir from issuer WisdomTree. In addition, inflation risks are being looked at more closely again, as Trump's tax cuts and spending increases could cause prices to rise. In addition, there are geopolitical tensions, including the fragile ceasefire agreement between Israel and Hamas.

Gold is currently trading at USD 2,743 per troy ounce, not far from its all-time high of just under USD 2,790 in October. A new record has already been set in euros. WisdomTree reports high inflows into precious metal ETCs for the past four weeks. ETC traders such as Ivo Orlemann from ICF Bank and Moritz Kretschmann from Lang & Schwarz also report good demand, especially for Xetra-Gold.

The gold holdings of Xetra-Gold (DE000A0S9GB0) currently stand at 166 tons, which is roughly the same level as at the end of 2024, compared to 198.7 tons at the end of 2023. As the analysis company Crossflow emphasizes, the investment volume in precious metal ETCs has been declining sharply for over two and a half years, especially for gold products. “Since May 2022, issuers have recovered a gigantic volume of 21.6 billion euros in share certificates,” explains the analyst firm. In the same period, the price of gold has risen from 1,850 to over 2,700 US dollars - an increase of 46 percent. 

No interest in gold ETCs in 2024

In 2024 as a whole, commodity and especially gold ETCs in Europe recorded high outflows on balance, as reported by Crossflow. A total of EUR 7.5 billion net flowed out of commodity ETCs. At EUR 6.3 billion, sales of gold ETCs accounted for the largest share by far. Commodity baskets were also sold (1 billion euros), as were oil and gas (278 million euros) and industrial metals ETCs (276 million euros) on a smaller scale. 

Oil: uncertainty surrounding “Drill baby, drill” 

The price of oil has risen sharply since Christmas. At its peak, the price of a barrel of Brent was USD 82, before falling slightly to just under USD 79. “The markets are processing the measures announced by President Trump, including the plans to increase domestic oil and gas production,” says Tahir.

However, Barbara Lambrecht from Commerzbank does not expect any short-term effects from this. What is more important is how the US president positions himself on the sanctions against Russia and Iran. “If there are signs of tougher action against Iran, oil prices could take another leap upwards,” explains the commodities analyst. Oil and gas ETCs have recently been on the sell-off lists, as WisdomTree reports. “Investors probably took profits in view of the price increases,” Tahir suspects.

Especially gold ETCs

Gold ETCs in particular are currently recording brisk turnover, alongside Xetra-Gold such as iShares Physical Gold (IE00B4ND3602), Invesco Physical Gold (IE00B579F325) and Amundi Physical Gold (FR0013416716). Also strong in terms of turnover: silver price trackers such as Xtrackers Physical Silver (DE000A1E0HS6) and WisdomTree Physical Silver (JE00B1VS3333). There is also a lot going on in oil and gas ETCs, such as WisdomTree WTI Crude Oil 2x Daily Leveraged (JE00BDD9Q840) and WisdomTree Natural Gas EUR Daily Hedged (JE00B6XF0923). 

Industrial metals: dependent on China

Industrial metals also reacted to Trump's inauguration with price declines. This is because a trade war could dampen the global economy and reduce demand for industrial metals. Prices had previously risen. WisdomTree reports slight outflows from industrial metal ETCs for the past four weeks.

Further developments are difficult to predict: “Ongoing geopolitical conflicts, moderate inflation and an erratic US trade policy are likely to shape the commodity markets until the end of 2026,” explains commodities analyst Dora Borbély from DekaBank. Stable global economic growth of 3 percent will serve as a solid foundation. However, Chinese growth, which is very relevant for the commodities sector, will remain weak for the foreseeable future - and will slow down demand for industrial metals in particular. “At the same time, an intensified trade conflict between the USA and China could lead to supply chain disruptions and trigger price increases.”

By Anna-Maria Borse, 23 January 2025, © Deutsche Börse

Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.

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