Gold ETF assets continue to grow despite price plateau

September once again saw positive net inflows for the month, pulling in $4.2bn worth of assets across all regions in tandem with the value of gold dipping back below $1,500/oz, according to the World Gold Council’s latest monthly report.

Holdings in gold-backed ETFs reached 2,808 tonnes by month’s end, surpassing 2012’s peak when gold was valued at $1,700/oz. North American and European-domiciled funds account for 52% and 44% of global holdings, respectively.

North America dominated September’s flows, accounting for $3.1bn out of the $4.2bn of global inflows. Europe and Asia’s flows were $586m and $187m, respectively.

Global rates and a strengthening US dollar meant gold’s price rally came to an end. The value fell 3.2% in September, from $1,521/oz to $1,473/oz however, the value and flows are likely to continue growing in October.

Several potential positive catalysts for gold in October, according to the World Gold Council, revolve around continued global uncertainty.

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The US is having discussions about proceeding with a formal impeachment investigation of President Donald Trump. This could have a knock-on effect for China to delay trade solutions until the next presidential election in 2020. In Europe, the possibility of a no-deal Brexit or a further extension is still on the table.

Secondly, interest rates are low worldwide with an estimated 80% of sovereign debt is being traded with negative real rates.

Finally, October can see some of the sharpest down-moves in stock performances with 2018 being a prime example of this when the S&P 500 fell 7% for this period.

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