Gold drops after fund holdings fall
Exchange-traded products lost US$18 billion last month as faith in the metal as store of value ebbs
The price of gold fell more than 2 per cent yesterday, set for its biggest daily drop since the metal's historic decline in mid-April, hit by a commodities sell-off and uncertainty ahead of a policy statement by the US Federal Reserve.
Spot gold fell 2.2 per cent to US$1,444.34 an ounce in New York morning trade.
Gold holdings in exchange-traded products (ETPs) plunged 174 tonnes last month, the biggest drop ever, as prices entered a bear market and wiped US$17.9 billion from the funds' value.
Holdings in the ETPs slumped 7.1 per cent to 2,275.84 tonnes, the lowest since October 2011. The value of the assets dropped to US$108.1 billion.
Investors pulled US$10.23 billion from gold funds in the first quarter, the most since at least 2000, when the data begins, according to EPFR Global.
The drop in ETP holdings underscores how some investors have lost faith in gold as a traditional store of value, even as central banks print money to boost growth.
