US commodity funds post biggest outflows of 2017: ICI

US- based commodities funds posted the largest withdrawals of 2017, bleeding $ 1.2 billion during the latest week and sending a contrarian signal to rising oil and gold markets, Investment Company Institute ( ICI) data showed.

Crude oil futures and gold have both generated more than 4 percent returns apiece over the last month, but withdrawals accelerated for US funds heavily invested in those assets.

Kristina Hooper, global market strategist at Invesco Ltd, said the selling could reflect concerns that “with oil in particular, there might not be control over production.”

As part of a deal with Russia and other non- members, the Organization of the Petroleum Exporting Countries has been reducing output by about 1.2 million barrels a day from January 1, 2017 until March next year. Officials are meeting in Abu Dhabi starting on Monday to discuss compliance.

Recent gains aside, oil has struggled to regain its peaks from before a vicious sell- off in 2014.

“Oil has been such a wild card,” said Hooper.

Gold prices, meanwhile, are gain- ing. A declining dollar helps gold by making it cheaper to foreign buyers and by reducing spending power and increasing inflationary pressures within the US.

Gold is often seen as a hedge against inflation.

Low bond yields also support gold. This competes with bonds for investor demand and pays no yield.