Rising energy prices have been positive for ETF investors focused on commodities recently, but rising geopolitical risk could provide additional boosts to ETCs, a specialist has claimed.
In the 10-page ETF Securities Commodity ETP Weekly, commodity strategist Martin Arnold said: “The energy sector was the one bright spot within a gloomy week for commodity markets.
“Lingering Greek uncertainty and rising geopolitical risk are likely to remain supportive influences for precious metals in coming weeks.”
According to the publication, US$39.3m (£24.9m) was withdrawn from long oil ETPs in the week to 11 June as investors tried to retain profits ahead of a potential market correction following energy price rises.
The top exchange-traded commodity flows for the week included US$16m (£10.1m) for ETFS Platinum Trust, US$8m (£5.08m) for ETFS Industrial Metals and US$4m (£2.5m) for ETFS Daily Leveraged Silver.
Mr Arnold also warned the strength of the US dollar could put pressure on commodity markets in the near term.
Analyst view
Oliver Wallin, investment director at Octopus Investments, said: “Strong supply levels would suggest a case for more downward pressure than upward momentum on the oil price. However, it seems for now that the oil price may remain at these levels.”
