Exodus of ETF investors, especially from palladium

Gold is still under pressure as the new week gets underway. Gold fell for a time to a four-week low of $1,135 per troy ounce. It would seem that Wednesday's surprisingly hawkish Fed statement is still having after-effects. 

Despite weaker US economic data of late, the market rates the likelihood of a rate hike in December as being 50%, as evidenced by the Fed Fund Futures. In the week to 27 October, money managers slightly reduced their net long positions in gold again for the first time in six weeks. This, coupled with outflows of 2.6 tons from gold ETFs on Friday, is clearly weighing on the price. 

Significantly more marked outflows are still to be seen from platinum and particularly palladium ETFs, holdings in the platinum ETFs tracked by Bloomberg were reduced by nearly 40,000 ounces on Friday, while the outflow from palladium ETFs actually totalled a good 90,000 ounces. 

In both instances, it was chiefly the South African ETFs which were responsible. Investors meanwhile appear to be literally fleeing from palladium ETFs, with 483,000 ounces or 16% of total holdings having been withdrawn here since the beginning of the year. 

"At around $665 per troy ounce, the palladium price is still faring relatively well, considering this situation. If the ETF outflows continue, however, it is envisaged considerable correction potential for the palladium price", says commerzbank.