Commodity Investors Withdrew a Record $9.3 Billion Last Month

Investors withdrew a record $9.3 billion from commodity exchange-traded products as gold sales pushed the metal into a bear market, BlackRock Inc (BLK) said.

The outflow for commodities in April pushed the total for the first four months this year to $17.8 billion, compared with inflows of $6 billion for the same period last year, BlackRock said in a report dated April 30. The previous record for commodity sales was $5.2 billion in February. Gold outflows were an all-time high of $8.7 billion last month as the metal slid to a two-year low in London on April 16, two sessions after falling into a bear market.

The Standard & Poor’s GSCI gauge of 24 raw materials fell 4.7 percent last month, the most since May. Investors cut gold-backed ETP assets that reached a record in December as faith in the metal as a store of value waned after inflation failed to accelerate and confidence mounted that the U.S. economy is improving. Gold prices that rallied for 12 years in the best run in at least nine decades are down 23 percent from the September 2011 peak as U.S. equities climbed to a record.

“The challenges facing the category have intensified as moderating inflation expectations and other factors led to a recent record plunge in the spot price for gold,” BlackRock said in the report.

The S&P GSCI gauge of 24 commodities dropped 2.4 percent this year, the MSCI All-Country World Index of equities gained 10 percent and gold is down 12 percent. Treasuries returned 0.4 percent, a Bank of America Corp. index shows.

Gold ETPs

Gold investments through ETPs dropped $17.9 billion so far this year through April, BlackRock said. Investors now own about 2,239.2 metric tons of billion through the products that first listed in 2003, compared with a record 2,632.5 tons in December, data compiled by Bloomberg show. Hedge funds and other speculators have cut bets on rising prices by 72 percent since October, U.S. Commodity Futures Trading data show.

Prices reached $1,321.95 an ounce on April 16 and traded at $1,471.38 today. Analysts at banks including Goldman Sachs Group Inc., Barclays Plc and Credit Suisse Group AG are among those forecasting further declines.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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