World's biggest gold ETF loses place in US top 10

JUN 4, 201511:03 PM

[LONDON] The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, is no longer one of the top 10 US-listed ETFs by value, according to data from FactSet.

The value of the GLD fund, which issues securities backed by physical bullion, dwindled to US$27.148 billion this week, data on its website showed, as its gold holdings fell to their lowest since mid-January at 709.9 tonnes.

That makes it the 12th largest fund by value listed by ETF.com, which uses FactSet data. At its peak in August 2011, a month before gold prices hit a record high of US$1,920.30 an ounce, its value reached US$77.5 billion.

It remains the largest commodity-backed ETF listed by ETF.com, however.

A 12-year rally in gold prices came to an end in 2013, with prices of the metal falling by more than a quarter the following year. They have since struggled to find direction, and have traded largely within a US$50 range since mid-February.

Gold failed to sustain a push above US$1,200 an ounce earlier this week, and on Thursday fell to a one-month low of US$1,175.25.

"Everyone's talking about the dwindling liquidity now in bullion markets," Societe Generale analyst Robin Bhar said.

"Prices are now very choppy because of that lack of liquidity."

The metal is suffering from expectations that the Federal Reserve is set to raise interest rates later this year for the first time in nearly a decade.

Gold benefited significantly from the ultra-low interest rate environment that followed the global financial crisis of the last decade, as it cut the opportunity cost of holding non-yielding bullion and also weighed on the dollar.

"Everyone's ultimately anticipating this move by the Fed," Mitsubishi analyst Jonathan Butler said. "We're expecting gold will have a final wash-out in expectation of that."

REUTERS