* Holdings of largest gold ETF fell 28.7 T last month
* Slide in gold prices to four-year lows spooks investors
* Further outflows set to increase pressure on gold
By Jan Harvey
LONDON, Nov 3 The world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Shares, saw an
outflow of over $1 billion of metal last month as investors
lightened holdings in anticipation of a further price drop from
current four-year lows.
Data from the GLD fund showed on Monday that its holdings
slid to their lowest in six years after an outflow of 28.7
tonnes in October, their biggest of any month this year.
Over the course of the month, gold prices also fell
to their lowest since early 2010 at $1,161.25 an ounce.
"Last month we saw two sharp moves down, and that will make
people think a little bit more before they buy, because of the
possibility that the market could move against them again,"
Mitsui Precious Metals analyst David Jollie said.
"It could be quite concerning if ETF outflows strengthen,
first of all because it sends metal into the market, and also
because it sends a message that is interpreted as bearish," he
"There is a self-reinforcing nature to these flows, and if
they become substantial, in time that will become a bearish
factor for gold."
Gold ETFs, which issue securities backed by physical metal,
are designed for investors seeking exposure to the gold price
without taking delivery of the bullion itself.
They proved popular with investors during the financial
crisis that followed the collapse of Lehman Brothers in 2008.
The GLD fund, launched in 2004, saw its holdings hit a
record 1,353.3 tonnes in late 2012. A sharp drop in the gold
price the following year prompted investors to liquidate
heavily, however, leading to outflows of 550 tonnes.
Selling eased off in early 2014, but has shown signs of
resuming as prices lost traction in the second half of the year.
Total holdings of the GLD have now fallen to just 741
tonnes, their lowest since September 2008.
Their retreat picked up speed in late October. Gold
slumped to its lowest since mid-2010 on Friday, hurt by a surge
in the dollar and expectations that the Federal Reserve will act
before other central banks to tighten monetary policy.
Selling from gold-backed ETFs is adding to that pressure,
"The market is clearly on the defensive and we have not seen
enough emerging market demand come through yet to stabilise
prices," HSBC analyst Jim Steel said.
"As long as there are outflows from ETFs, and we see
liquidation in other parts of the market, the market is going to
stay on the defensive."
(Editing by Dale Hudson)