The 2019 April World Gold Council’s Fund Flows report reveals that bullish sentiment around the global economic outlook combined with dollar strength led to a 2 per cent slide in global gold-backed ETF holdings, causing USD2.2 billion in outflows.
The 2019 April World Gold Council’s Fund Flows report reveals that bullish sentiment around the global economic outlook combined with dollar strength led to a 2 per cent slide in global gold-backed ETF holdings, causing USD2.2 billion in outflows.
However, the council writes that stretched stock valuations, dovish monetary policy, continued political uncertainty in Europe, and unresolved US/China trade issues could create more favourable conditions for gold throughout the rest of 2019.
The report found that global assets under management (AUM) in US dollars fell by 3 per cent to USD100 billion, as the price of gold fell 1 per cent during the month. This meant that regionally, North America led outflows in both absolute and percentage terms, losing 46t (USD1.9 billion, 3.7 per cent AUM).
Meanwhile, Europe gave up early-month inflows and lost 8t (USD257 million). Though most of the outflows were from UK-based gold-backed ETFs, holding in these funds remained near all-time highs, likely due to Brexit uncertainty driving heavy inflows over the past few quarters, the council comments.
Asia lost 4 per cent of assets, mainly from Chinese funds, as local investors appear to be shifting assets away from gold, the council says.
Gold trading volumes in April decreased to USD106 million per day, 7 per cent below the 2018 average.
Juan Carlos Artigas, Director of Investment Research at the World Gold Council says: “North American outflows were influenced by bullish sentiment in the US stock market as it continues to reach new highs, implied volatility fell to pre-October 2018 levels, and the US dollar strengthened to a two-year high.
“Outflows in Europe were led by the UK, where a 6-month Brexit delay improved investor sentiment and strengthened the pound, creating a shift in the positive trend seen in earlier months.
“Looking forward, we believe that expectations of financial market uncertainty, shifts in monetary policy and structural economic reforms in major gold markets will influence gold’s performance in 2019.”
