S&P 500 Forecast: SPY ETF Clocks Outflows Alongside Gold, Treasury Funds

The S&P 500 trades at record levels alongside the Dow Jones and Nasdaq 100 as the major indices continue to tick higher. Equity demand outside of the United States is similarly robust as the Nikkei 225 surpassed 30,000 for the first time in three decades. Not to be outdone, highly speculative assets like Bitcoin have also established new highs. It is rather surprising then, that the S&P 500-tracking SPY ETF has registered net outflows in the year-to-date, while the index itself has climbed roughly 5%.

S&P 500 PRICE ALONGSIDE SPY FUND FLOWS

S&P 500 price chart

Even as price continues to climb, the SPY ETF has seen nearly $9 billion in net outflows since January 1. With few changes in the fundamental landscape and sentiment recovering nicely following the tumultuous resolution to January, it seems there is little to suggest stocks will suddenly reverse lower for the longer-term. Thus, it can be argued the net outflows from SPY might be attributable to mere profit-taking.

GOLD LOSES ITS LUSTER AS DECLINES CONTINUE AND INVESTORS LEAVE GLD ETF

Further still, exchange-traded funds with exposure to safe haven assets like gold and US Treasuries have also suffered net outflows alongside price declines, hinting the withdrawals from SPY do not coincide with an uptick in safe haven demand.

Gold Price Alongside GLD Fund Flows

gold price chart

Barring a few notable inflows, GLD has seen outflows outpace inflows since gold’s rally peaked in August, but outflows have become even more frequent in recent months. In the year-to-date, GLD has seen $1.6 billion leave its coffers as a result. As the price of gold appears vulnerable to further losses and the GLD ETF reveals a lack of demand for the yellow metal, price action and fund flow data coincide more closely with what one might expect to see when investors are reducing exposure to an ailing position – rather than the current relationship between SPY flows and the S&P 500.

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