Markets are underpricing the risk of a bigger sell-off in gold into the year-end, according to Kathleen Kelley, chief executive of research firm Queen Anne's Gate Capital.
In 2020, many investors piled into gold as prices went from $1,600 to a new record high of over $2,000 an ounce. And based on ETF positioning before the big COVID gold-buying spree happened, investors might be looking at closing out more of their current positions that are underwater, Kelley told Kitco News.
"During COVID, a lot of people put part of their assets into gold, especially into ETFs," she said. "Everyone piled into gold ETFs, and gold ETFs went from 80 million ounces up to 110 million ounces. A lot of those purchases are now underwater."
In 2022, gold saw seven months of consecutive losses and was trading near the $1,600 an ounce level in October. Recently the precious metal caught a bit of a bullish wave as chaos in the crypto space following the FTX collapse pushed people into safer assets, such as gold.
"Right now, you've got a bounce in gold because of what's happening in crypto. A lot of assets are coming out of crypto, and some money is flowing back into gold. That has helped gold get through the $1,600 level, but gold will go back down soon," Kelley noted.
In 2020, many investors piled into gold as prices went from $1,600 to a new record high of over $2,000 an ounce. And based on ETF positioning before the big COVID gold-buying spree happened, investors might be looking at closing out more of their current positions that are underwater, Kelley told Kitco News.
"During COVID, a lot of people put part of their assets into gold, especially into ETFs," she said. "Everyone piled into gold ETFs, and gold ETFs went from 80 million ounces up to 110 million ounces. A lot of those purchases are now underwater."
In 2022, gold saw seven months of consecutive losses and was trading near the $1,600 an ounce level in October. Recently the precious metal caught a bit of a bullish wave as chaos in the crypto space following the FTX collapse pushed people into safer assets, such as gold.
"Right now, you've got a bounce in gold because of what's happening in crypto. A lot of assets are coming out of crypto, and some money is flowing back into gold. That has helped gold get through the $1,600 level, but gold will go back down soon," Kelley noted.