Rising gold prices
The rising gold price has lifted hopes for gold after the downfall in prices in 2015. The gold-based ETF investments like the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU) have been primarily taking their prices from gold itself.
As the gold price rose relatively high considering the past year, the positions in the SPDR Gold Shares rose for the first time in 2016. The slumping gold prices had resulted in net short positions in precious metal ETFs. However, for the week ending January 12, according to the Commitment of Traders, the net long positions rose for the first time in almost nine weeks.
As of the week ending January 19, the net long fund position is up 16,019 contracts from the previous week. The improvement in speculative positioning for the second straight week amplifies the growing positive sentiment in gold. The majority of the long positions may also be due to short covering. The ETF investors bought almost 19 tons of gold in the second week of January 2016.
The price of GLD and IAU have risen 4% and 4.1%, respectively, since the start of the year. The grim outlook for China, which spread an epidemic of bearish sentiment, has boosted precious metal prices and the precious metal ETFs.
The South African mining companies like AngloGold Ashanti (AU), Sibanye Gold (SBGL), and Gold Fields (GFI) have gained 15.3%, 35.6%, and 9.6%, respectively, during the past one month. The main reasons for the increase in the share price are the rising gold prices and the declining South African rand against the US dollar.