Strength in US dollar and rise in Treasury yields pressured precious metals. Gold initially surged to a new record high of 1432.5 while silver jumped to a 30-year high earlier last week as Obama agreed to extend Bush-era’s rate cuts for 2 years. However, profit-taking as well as higher bond yields triggered selloff. In the longer term, there are favorable factors supporting gold’s rally. Low interest rates, inflationary concerns in emerging markets and potential inflationary pressures brought about by QE in advanced economies and sovereign concerns in the European periphery will continue to attract gold purchases. For PGMs, improved manufacturing activities and recovery in auto sector are driving up demands.

Performance in gold ETF was mixed, leading to a drop of -117.55K oz, or -0.27%, in gold holdings to 66.29M oz in the week ended December 10. During the week, spot gold prices fell -2.04% while Comex gold futures lost -1.50%. SPDR Gold Trust, which represents 62.55% of global ETF holdings, fell -263.61K oz last week, taking the year-to-date investment to 5.02M oz and the combined holdings to 41.47M oz. Meanwhile, ETFS (Australia) dropped -10.00K oz, Gold Bullion Securities lost -9.17K oz and New Gold Trust slid -130 oz during the week. There were 5 gainers last week. ZKB Gold ETF added +34.50K oz, taking the year-to-date investments to 1.30M oz and total gold holdings in the fund to 5.99M oz. ZKB's fund currently represents more than 9% of global ETF holdings. ETFS (LSE-listed) gained +37.76K oz, taking gold holdings in the fund to 4.39M oz. Other funds showing gains included Julius Baet Physical Gold Trust, ETFS (US) Gold Trust and ETFS Precious Metals Basket Trust.

Holdings in silver ETFs soared +9.51M oz, or +0.34%, to 563.49M oz last week. During the week, spot silver and silver futures prices slipped -2.27% and -2.25% respectively. iShares Silver Trust, the largest silver ETF taking up 62.43% of the market share, added +5.23M oz, or +1.51%, to 351.77M oz during the week. ZKB Silver ETF jumped +1.92M oz, or +2.53%, after a drop of -471.39K oz in the prior week, bringing the fund’s holding to 77.81 M oz. ETFs issued by ETF Securities remained strong with the London-listed fund surging 903.84K oz, or +3.04% and the 3 NYSE-listed funds together gaining 947.06K oz. ETFS(Australia) was the only ETF recording redemption.

Investment in platinum ETFs jumped strongly, by +61.57K oz, or +5.54%, to 1.17M oz although platinum price fell almost -3% during the week. The 3 NYSE-listed funds issued by ETF Securities added a total of +51.40K oz during the week. Palladium ETFs performed even better with total holding surging +184.82K oz, or +9.07%, to 2.22M oz last week.