Gold has a reputation of being a safe-haven asset class and that reputation has buttressed in recent days as the SPDR Gold Shares (NYSEArca: GLD) has posted a five-day gain of 1.5% while the S&P 500 has shed 2.8%.
Then again, gold’s safe-haven status is being betrayed by soaring volatility, a characteristic investors typically avoid when searching for asset classes perceived as safe. On Tuesday, the “Chicago Board Options Exchange Gold ETF Volatility Index, derived from options prices on GLD, reached the highest since November 2013,” reports Debarati Roy for Bloomberg.
Gold ETFs were wracked with outflows during the third quarter. During that quarter, GLD, the world’s largest ETF backed by physical holdings of gold, shed nearly $774 million in assets while investors pulled a combined $91 million from the iShares Gold Trust (NYSEArca: IAU) and the ETFS Physical Swiss Gold Shares (NYSEArca: SGOL). [Dim Outlook for Gold ETFs]
However, that trend is abating in October as “more than $1 billion has been added to the value of global exchange-traded products backed by bullion this month,” according to Bloomberg. The Gold VIX for December, which measures volatility gold futures, hit 18.70 yesterday, up from 15.5 in mid-September, according to CME Group data.
Eurozone growth concerns helped support gold prices. For instance, factory output from the union declined in August and Germany’s ZEW institute did not rule out a recession in for the Eurozone’s largest economy.