August witnessed the ninth consecutive month of inflows into gold-backed ETFs, according to the World Gold Council (WGC), albeit at their slowest pace in 2020.
The result is that year-to-date gold ETF inflows have surpassed the largest annual gain of 646t seen in 2009 by nearly 50 per cent. Inflows this month were driven by appetite for gold-ETFs in Asia which supported continued North American demand in August.
Conversely, European funds had net outflows of 11t (USD937 million, 0.9 per cent AUM) for the first time since November 2019, driven by outflows from German-based gold-ETFs, the WGC says.
Adam Perlaky, Manager, Investment Research, at World Gold Council says: “August data shows us that increased investor interest alongside new fund launches in Asian countries provides significant support for the record highs gold is reaching this year in terms of both tonnage and value terms, especially as consumer demand weakens.
“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.
“A stronger euro, which has appreciated 9 per cent against the US dollar over the past four months, along with improving investor sentiment in the region, could have also played a role in European outflows.”