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Positive inflows in Gold-backed ETFs as investors hedge risk

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NEW YORK (Scrap Register): Gold-backed ETFs and similar products account for a significant part of the gold market, with institutional and individual investors using them to implement many of their investment strategies, according to the World Gold Council.

Flows in ETFs often highlight short-term and long-term opinions and desires to holding gold. The data on this page tracks gold held in physical form by open-ended ETFs and other products such as close-end funds, and mutual funds. Most funds included in this list are fully backed by physical gold.

Holdings in global gold-backed ETFs and similar products rose in October by 16.5 tons (t) to 2,346t, equivalent to US$1.0bn in inflows.

This was the first monthly inflow in four months. Positive gold price performance for the month (+2.3% in USD) was a key driver of inflows in North American and European funds.

Global assets under management (AUM) rose by 3.1% in US dollars relative to September.

Global stock markets experienced their worst October since the 2008 financial crisis with the MSCI All-World Index down more than 7.4% on the month.

As a result, gold benefited from flight-to-safety investment flows. Further, US dollar-hedged gold benefited in the stronger dollar risk-off environment, rallying 4.3% on the month.

The Solactive GLD Long USD Index is now effectively flat on the year, despite gold in US dollars being down 5.8% over the same period.

Flows in North American gold-backed ETFs were positive, led by inflows in US-listed funds and counterbalanced by softer outflows in Canadian funds.

Europe also had inflows, driven primarily by UK-listed funds, with nearly half the European inflows coming from currency-hedged funds. Chinese-listed funds experienced extreme flows across funds, resulting in outflows equivalent to 8% of assets.

This was the second straight month of significant outflows, driven in part by profit-taking from some investors as the gold price in yuan rose by as much as 5% in October.

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