While Coronavirus Fears Spiked, Investors Plowed Into Gold ETFs

Holdings in physical gold-backed exchange traded funds jumped to all-time highs in March as the heightened volatility and uncertainty stemming from the coronavirus outbreak caused investors to seek safety in the precious metal.

According to new World Gold Council data, holdings in gold-backed ETFs reached all-time highs in March with net inflows up by 5%, or $8.1 billion, marking a record-breaking quarter as gold ETF holdings and assets added $23 billion in net inflows, the largest quarterly gain in history.

For example, the SPDR Gold Shares (NYSEArca: GLD) was among the most popular ETF plays over the first quarter, attracting $3.8 billion in net inflows, according to ETFdb data.

Gold ETFs have also seen their highest yearly addition since the financial crisis, with assets under management increasing by 57%.

ETF holdings increased by 298 metric tons over the January-March period, with 151 tons added in March alone. The spike in interest raised holdings to a new all-time high of 3,185 tons, according to the World Gold Council. In the past year, gold ETFs also accumulated 659 tons of gold, the most on a rolling annual basis since the financial crisis, Kitco reports.

Since the start of March, gold outperformed most major asset classes this year, with COMEX gold futures now hovering around $1,687.6 per ounce.

“Trading volumes and AUM [assets under management]reached record highs as gold volatility increased to levels last seen during the financial crisis, yet gold price-performance was mostly flat in U.S. dollars for the month [of March],” according to the WGC. “Gold prices denominated in many other currencies, however, continued to reach all-time highs although the price in U.S. dollars remained 15% below its 2011 high. This highlights a continued trend of growth in gold ETFs outside of the U.S. over the past few years – a trend underscored by European funds seeing the largest absolute inflows and Asia and other regions registering the largest percentage growth during the month.”

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