Industry Updates

Coronavirus drives gold ETF assets to record highs in February

George Geddes

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Global gold-backed ETFs saw inflows of $4.9bn in February, in tandem with the price of gold climbing 2%, which bolstered assets under management (AUM) to grow 4.4%, according to the World Gold Council.

The reason for the significant inflows was investors seeking haven following the uncertainty surrounding the potential impact of the coronavirus. As a result, all regions saw significant inflows into gold ETFs.

North American funds’ AUM grew by 2.9% over the course of the month, equating to $2.3bn. Similarly, European funds grew by 2.8% ($2bn) as well as Asian funds, primarily in China, grew by 9.5% ($425m).

As a result of the high demand for the yellow metal, the price of gold soared to $1,672 an ounce in the last week of February, the highest since 2013.

Coronavirus: Emerging market ETFs to only suffer short-term 

The World Gold Council highlights several factors that will continue the growing demand for gold in the coming weeks and months. Namely, the US 10-year and 30-year bond rates continue to hit all-time lows.

Additionally, the Federal Reserve in the US made a 50bps rate cut in its bid to ease concerns regarding the effects of the coronavirus which took the market by surprise.

Over the last 12 months, assets globally have grown nearly 50% and given February’s gold price rally and inflows mean AUM is at an all-time high. The US has seen positive flows into cheap gold-backed ETFs for 20 of the past 21 months and has grown assets by 223%.

Gold ETF flows YTD (by February’s end)

RegionFlows Total AUMNorth America$3.7bn (4.8%)$78.3bnEurope$3.7bn (5.1%)$71.8bnAsia$368.6m (8.2%)$4.5bnOther$172.8m (7.2%)$2.4bnTotal$7.9bn (5.1%)$157bn

Source: The World Gold Council

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