SA move ‘may lift metals demand’
LONDON — South Africa’s proposal to ease domestic restrictions on exchange-traded products may increase demand for precious metals, according to Deutsche Bank.
A limited number of financial institutions are allowed to operate gold-backed exchange-traded products and the government proposes to open such products to other qualifying institutions, the Treasury has said.
The proposed classification will increase investment options and boost demand as more providers offer products, Deutsche Bank said.
It said it was unclear whether palladium and rhodium exchange-traded products would be set up under the definition of commodity exchange-traded products.
"It could be beneficial for both," Michael Lewis, head of commodities research at Deutsche Bank in London, said. "If you classify them as domestic assets, then the proportion you’re allowed to hold in them increases."
Investors own 2,506 tons of gold valued at $127.1bn through exchange-traded products, data compiled by Bloomberg show. Assets are down 4.8% from the December 20 record. Investors own 19,594.3 tons in silver products, 51.2 tons of platinum and 67.2 tons of palladium.
South Africa is the biggest platinum producer and second-biggest palladium miner, Johnson Matthey estimates.
More in this section
- Gold falls for fourth day as US data boosts stocks, dollar
- Stocks fly after US data, Fed official cools on rate hike
- Oil jumps over 6% as shorts cover on risk rally, supply hits
- JSE closes firmer in line with global market relief rallies
- Rand firms as emerging currencies and markets rebound
- Bonds track firmer rand as emerging markets recover