Investing in Gold ETFs: Record High Inflows in August 2024
Global physically backed exchange-traded funds (ETFs) saw a fourth consecutive month of inflows in August, driven by increased holdings in North America and Europe, according to the World Gold Council (WGC). Gold ETFs, which hold physical bullion, play a crucial role in gold investment demand. The precious metal reached a record high of $2,531.60 per ounce on August 20, boosted by expectations of U.S. interest rate cuts.
Despite a recent positive trend, gold ETFs experienced outflows for three years due to high global interest rates. The four-month streak of inflows partially offset year-to-date losses, resulting in a net outflow of 44 metric tons. In August, gold ETFs added 28.5 tons, valued at $2.1 billion, increasing total holdings to 3,182 tons. The rise in gold prices and inflows raised total assets under management to $257.3 billion in August.
Global gold trading volumes decreased by 3.2% in August, with daily trading volumes averaging $241 billion, mainly due to lower exchange-traded activity on COMEX. However, activity in the OTC market rose by 5.9%, averaging $158 billion.
With gold prices up 21% in 2024 and expectations of U.S. interest rate cuts, speculators on COMEX increased their net long positions by 17% in August, reaching 917 tons—the highest level since February 2020.
Analysis:
Investors have shown a growing interest in gold ETFs, with inflows in August marking a positive trend. The increase in gold prices and total assets under management indicate a favorable environment for gold investments. Speculators are also taking advantage of the market conditions, with higher net long positions on COMEX. Understanding these trends can help individuals make informed decisions about their investments and potentially benefit from the current market dynamics.