Gold ETFs cling on to holdings despite drop in value

George Geddes

a close-up of a pair of books

Global assets under management in gold-backed ETFs fell by 1.6% to $103bn in March as a result of the commodity’s value dropping by 2%, according to data by World Gold Council (WGC). This was despite a slight jump in global holdings by 3 tonnes to 2,483t.

Global gold-backed ETF flows remain positive on the year due to large inflows in January following a volatile Q4 2018. The year-to-date flows remain at $1.9bn despite a temporary set back in February as the market faced a minor selloff in gold ETFs.

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Regionally, North America saw a month of two halves, as investors reversed the $2bn outflows to finish the month positive. The change in opinion was due to a spike in gold price caused by a more dovish Federal Reserve, WGC says.

WGC expects there to be continued investments in gold because of market uncertainty caused by the decoupling between stock and fixed income markets, the prolonging of Brexit and the trade war between the US and China. Brexit alone has resulted in UK gold-backed ETFs posting record highs in holdings.

The Xtrackers Physical Gold GBP Hedged ETC contributed 1.5t, worth $64m, to the region’s total flows of 0.3t, worth $53m. The total holdings were significantly smaller because of outflows from the ETFS Physical Gold ETC and the UBS Gold CHF Hedged ETC seeing outflows of 4.6t and 1.2t, respectively.

Source: Bloomberg

The Xtrackers Physical Gold GBP Hedged ETC (XGLS) performance is slightly down on the year by 0.8% (above). For March, XGLS price did rise by 2.8% in the first two weeks but was then wiped out in the following two weeks.


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