Commodity ETP assets hit record $207 bln in Q3

Mon Oct 8, 2012 3:55pm BST

* Gold ETP assets jump to record $151 billion

* Gold seen pausing until Spain asks for bailout

* Outflows in energy, agricultural ETPs

LONDON, Oct 8 (Reuters) - Assets in exchange-traded products (ETPs) in the commodity sector reached a record of $207 billion in the third quarter, driven by gold products as central banks launched new stimulus programmes, ETF Securities said on Monday.

Assets in gold ETPs jumped by $22.7 billion to a record $151.4 billion as investors worried about the risk of debasement of currencies as central banks effectively began printing money again, said Nicholas Brooks, the firm's head of research.

The rise in assets included the impact of both investor buying and rising prices.

In the short term, Brooks said, investors may hold off buying gold until Spain requests a bailout, a condition for the European Central Bank to begin buying its bonds and cut its borrowing costs.

"To the extent that Spain continues to wait and put off taking the (bailout) package and that keeps the euro under pressure and the dollar strong, that will weigh on gold and broader commodity performance," he told a conference call.

"When they ask for a bailout, and I think they will ... you could see quite a big rally in gold and possibly broader commodities."

Spot gold was set for its largest two-day fall in two months on Monday.

Diversified commodity ETPs recorded the second-largest net inflows after gold, with $1.1 billion of new purchases, taking total assets up to $17 billion.

"The broad diversified ETPs have seen good flows, and that has continued into October, but whether that continues will be very much dependent on, in particular, how U.S. data pans out and also whether Spain ultimately asks for a bailout," Brooks said.

Most other precious metals and diversified industrial metal funds also saw inflows.

But agriculture and energy products saw outflows as investors took profits following rallies. Stripping out the impact of prices on ETP assets, net outflows amounted to $627 million in energy ETPs and $77 million in agricultural products.

ETP Securities is one of the biggest providers of exchange-traded investment products, with about $30.5 billion in assets, and tracks global flows in the sector. (Reporting by Eric Onstad; editing by Jane Baird)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.