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Global stash of Gold ETFs hits new high

05 February 2020


The global stash of gold in exchange-traded funds (ETFs) has risen to a record after a long run of accumulation that’s been given added impetus in recent weeks by the fall-out from the widening coronavirus crisis.


Worldwide holdings in bullion backed ETFs climbed to 2,573.9 tonnes on Monday, topping the previous peak set in 2012, according to an initial Bloomberg tally. The latest additions follow four straight years of inflows, and come as prices of the traditional haven trade near the highest level since 2013. Gold has risen as the health emergency centered in China hurts appetite for risk at a time when US interest rates are expected to remain low for some time, with some investors seeing further easing from the Federal Reserve. Among them, Double-Line Capital LP chief executive officer Jeffrey Gundlach said on Friday he now sees a 90 per cent chance for a Fed rate cut this year. Simmering geopolitical tensions have also driven interest in bullion.


“Gold ended 2019 with its best gains in a decade, closing up by 18 per cent , so momentum was well and truly building in the ETF sector well before the coronavirus,” Gavin Wendt, senior resource analyst at MineLife Pty in Sydney, said in an email. “Evidence is growing for US dollar weakness, which could last for at least the first half of 2020 and beyond, providing further impetus for gold.” The record means investors are holding an unprecedented volume of bullion in ETFs even as US equities remain near all-time highs. After surging 29 per cent last year, the S&P 500 Index set its last closing high on January 17, although it’s fallen for the past two weeks as the virus led to concerns about a global pandemic. Monetary policy and geopolitics have fuelled the bulk of annual ETF inflows, while the price rise also drew in momentum-driven buying, the World Gold Council said in its demand trends report for 2019.