Yesterday, for the third time in the last 8 weeks, the trust for the SPDR Gold Shares ETF (GLD) added 7.5 tonnes to its holdings. These are the biggest daily inflows the trust has seen since late-2012 and they signal renewed interest in the metal by U.S. investors, a key prerequisite for extending the current gold market rally.
This recent change from outflows to inflows is important because GLD is widely seen as a good gauge of investor sentiment toward gold in the West and, in the view of many analysts (including myself), the gold market needs buying in the West to support higher prices.
Note that this is in sharp contrast to Asia where buying increases as prices fall. Should the gold price rise another few hundred dollars from here, those responsible for the record gold buying in China last year (at much lower prices) are going to look awfully smart as investors and traders in the West chase prices higher.
As shown below using data from the SPDR website, Monday’s big increase in GLD holdings follows the same size increase less than a month ago on February 13th and this followed less than a month after the same size gain on January 17th.