Gold-Backed ETFs Report Fifth Straight Month of Inflows Led by North American Funds
In September, gold-backed ETFs saw a net inflow of metal for the fifth consecutive month, with North American funds leading the way. Globally, ETFs reported a net increase of 18.4 tons in holdings, bringing the total to 3,200 tons of gold by the end of the month.
The combination of inflows and rising gold prices boosted the total assets under management (AUM) of gold-backed funds by 5 percent to $271 billion. Year to date, AUM has grown by an impressive 26 percent.
The Federal Reserve’s rate cut of 50 basis points drove bond yields and the dollar lower, creating favorable conditions for gold. The price of gold in dollars increased by 4.6 percent last month.
Geopolitical tensions, especially in the Middle East, also contributed to inflows into gold ETFs as investors sought safe havens. However, Europe was the only region to report outflows, with the UK-based funds seeing a decline due to the Bank of England’s decision to keep interest rates unchanged.
Asian funds continued their streak of adding gold for the 19th straight month, while other regions like Australia reported inflows as well. Global gold trading volumes rebounded in September, indicating a strong interest in the precious metal.
ETFs provide a convenient way for investors to participate in the gold market, but it’s important to note that owning ETF shares is not the same as holding physical gold. While ETFs offer liquidity and ease of trading, investors should be aware that they are not directly owning gold. In times of inflows, challenges may arise in obtaining physical metal.
Overall, the trend of gold ETF inflows reflects growing investor interest in the precious metal, driven by various factors including geopolitical tensions, economic uncertainty, and the desire for safe haven assets. Understanding the dynamics of gold ETFs can help investors make informed decisions about their financial portfolios.