Money managers withdrew $1.27 billion from gold and precious-metals funds in the week ended May 8, according to Cameron Brandt, the director of research for Cambridge, Massachusetts-based EPFR Global, which tracks money flows. This year’s outflows of $20.8 billion are the largest withdrawals since the firm began tracking the data in 2000.
A majority of the 38 analysts surveyed by Bloomberg last month predicted the metal will decline in 2013, ending a 12-year bull run. Billionaire investor Warren Buffett said May 2 that gold has no appeal even after the rout. The drop in global ETP holdings wiped $37.4 billion of value from the assets this year, while more than $4.6 trillion has been added to the value of global equities, data compiled by Bloomberg show.
Paulson favors the metal even after his Gold Fund saw declines of about 47% this year, according to two people familiar with the matter. Paulson & Co. is the biggest investor in the SPDR Gold Trust, the largest bullion ETP. The metal helps diversify portfolios, BlackRock’s Kapito said in an interview with Tom Keene on “Bloomberg Surveillance.” Kapito said he would “still be a buyer of these short-term technical blips.” BlackRock is the top investor in the iShares Gold Trust.
Physical demand for gold drove an 8% gain in prices from a two-year low on April 16. Indian imports reached more than 100 tons in April, now valued at $4.7 billion, and shipments probably will top that again this month, according to refiner MMTC-PAMP India Pvt. The country’s gold imports were 860 tons last year, the London-based World Gold Council estimates. Consumption in China rose 26% in the first quarter from a year earlier, the China Gold Association said May 7.
Gold surged 62% since the end of 2008 as the Fed was joined by central banks in Europe and Japan in printing unprecedented amounts of money, almost doubling sovereign debt to more than $23 trillion, a Bank of America index shows. Twelve analysts surveyed by Bloomberg expect prices to rise this week, with 10 bearish and five neutral.
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