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Gold-backed ETFs benefit from market volatility

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The World Gold Council’s November report reveals that gold-backed ETFs benefited from ongoing global stock market volatility, the under-performance of other commodities, such as oil, and geopolitical developments. 

Global gold-backed ETFs experienced a second month of inflows in November, with positive flows across all regions with USD804 million in inflows to global gold-backed ETFs reaching a total of USD92 billion.

While North America had inflows for a second straight month, it still leads with global outflows on the year. European funds led global inflows, with strong flows into UK-based funds, likely related to Brexit concerns, the World Gold Council says. Asian funds turned around two months of weak performance adding 2.3 per cent to their assets.

US dollar flows in gold-backed ETFs are now positive having raised USD354 million (+40bps AUM), despite the recent trend driven by a strong US dollar and bearish gold market sentiment.

SPDR Gold Shares led global inflows, gaining USD309 million, 1.1 per cent), followed by iShares Physical Gold which gained USD207 million, 6.3 per cent), and Gold Bullion Securities USD82 million, 2.7 per cent – both in the UK – as well as Huaan Yifu Gold, in China, which added USD104 million, 13.3 per cent). Notably, low-cost gold-backed ETFs in the US have also continued to add assets as strategic holders have increased holdings.

Juan Carlos Artigas, World Gold Council’s Director of Investment Research, says: “As market volatility continued and commodities like oil underperformed, global gold-backed ETFs saw a second month of inflows, rising by USD804 million and reflecting a full reversal of what had been an outflow trend on the year.

“Across all regions, flows were positive. In particular, UK-based funds experience strong movement as Brexit concerns have ramped up alongside a softening in sterling.

“North American funds saw inflows for a second straight month with US dollar flows in gold-backed ETFs now positive on the year, despite bearish gold market sentiment and a strong US dollar.”

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