Gold ETF wrap up best run in a decade

Last month’s Fed announcement suggesting rates may remain near zero for the foreseeable future, coupled with real rates in most developed countries hovering at negatives, extends an environment where the opportunity cost of gold can remain low for investors. At the same time as economic and geopolitical indicators continue to paint a picture of uncertainty, we’re seeing stock indices turning positive. This disconnect in mind, we expect the high risk, low rate environment to continue to fuel demand for gold within investments like gold ETFs.

Gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier and alleviate losses during tough market conditions and economic downturns. Investors are keeping their faith with gold even as prices struggle last month. Holdings in bullion-backed exchange-traded funds are wrapping up an eighth quarter of expansion, the longest run in almost a decade. So far in 2020, world total Gold ETF holdings have surged about 860 tons, dwarfing any prior full-year inflow, and are near a record.

Gold ETF wrap up best run in decade as Investor pile in

Source: Bloomberg

Investors’ favorite way of buying gold this year has been through exchange-traded funds, which have added 862 tons of bullion. Total gold held by ETFs rose 34 percent this year to 110.9 million ounces as gold advanced 26 percent this year.

World Gold ETF Holdings at record levels

Source: Bloomberg

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