Gold ETFs record strong inflows amid market uncertainty

Feb 7th, 2019 | By | Category: Commodities

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Holdings in gold-backed ETFs listed globally rose by 72 tonnes in January, equivalent to $3.1 billion in net inflows, according to the World Gold Council.

Gold ETFs record strong net inflows amid market uncertainty

Total gold ETF holdings at the end of January 2019 are at their highest level since March 2013.

January marked the fourth consecutive month of net inflows for gold ETFs, while a shift in sentiment pushed the price of gold 3.5% higher during the month.

Due to robust net inflows, combined with strong price appreciation, global assets under management in gold ETFs rose by 6% during January.

The World Gold Council notes that inflows during the month were linked to strategic allocations as investors sought to navigate ongoing market uncertainty.

The organization writes, “Global stock markets rebounded off the Christmas Eve low and finished the month up 7% on average – the strongest monthly start to the year since 2003.

“However, market uncertainty remains a concern, especially as the impact of the US Government shutdown is yet to be assessed, Brexit is far from being resolved, and trade negotiations continue. In addition, the Fed has signaled a ‘wait and see’ approach and other central banks may follow suit.”

North American-listed gold ETFs enjoyed the majority of net inflows with 53t ($2.2bn, 4.1% AUM) recorded during the month.

The SPDR Gold Shares (GLD US) led global inflows, gaining 36.2t ($1.5bn, 4.7%), followed by the iShares Gold Trust (IAU US), which added 12.3t ($512 million, 4.4%), as momentum investors moved into the most liquid funds.

Low-cost gold ETFs in the US – those with management fees of 0.20% or less – also continued to add assets. The GraniteShares Gold Trust (BAR US) gained 2.9t ($119m, 38%), while the SPDR Gold MiniShares (GLDM US) added 2.5t ($106m, 27%).

Low-cost gold ETFs have established a trend of attracting strong inflows lately with these funds gaining 16t ($700m) globally in the past six months, representing growth of 53%.

In Europe, holdings in gold ETFs rose by 20t ($902m, 1.9%) during January. Flows were led by the ETFS Physical Gold (PHAU LN) with 9.7t ($406m, 6.1%).

Gold funds listed in Asia increased their holdings marginally, while other regions saw a decrease in holdings of 1.3t ($62m, 4.7%).

Total holdings in gold ETFs amounted to 2,513t ($107bn) at the end of January, its highest level since March 2013, when the price of gold was 22% higher.

Gold mining stocks also benefitted from the gold price increase with the L&G DAXglobal Gold Mining UCITS ETF (AUCO LN) and VanEck Gold Miners UCITS ETF (GDX LN) gaining 9.3% and 8.3%, respectively, during January.

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