Gold ETFs have been a shining through a gloomy market as investors poured billions of dollars into this asset category in face of rising uncertainty.
According to the World Gold Council, investors funneled $2.6 billion into gold bullion-backed ETFs in July, raising their collective holdings to 2,600 tons, or the highest level since March 2013, the Wall Street Journal reports.
Meanwhile, gold prices rallied 17% over the past three months and recently broke above $1,500 per ounce for the first time in six years. Comex gold futures were hovering around $1,522 per ounce on Friday.
Investors have shifted over to safe-haven plays like gold in face of renewed anxiety over trade tensions between the U.S. and China, the two biggest economies in the world, and growing fears of a global slowdown.
The rally in precious metals was also fueled by a shift in the Federal Reserve’s monetary policy after it cut interest rates for the first time in a decade. The expectations for lower borrowing costs bolstered the gold outlook as bullion typically underperforms yield-generating assets in a period of rising rates.
Top Gold ETF Plays of July
Among the top plays, the SPDR Gold Shares (NYSEArca: GLD) attracted close to $2 billion in net inflows over the past month, accounting for over two-thirds of its total inflows so far this year.
Observers argued that the rally in gold may still have legs in the near term as more use the precious metal to hedge further market risks.
“This has been one of the best environments for gold in the past half decade,” Ryan Giannotto, director of research at GraniteShares, which offers the GraniteShares Gold Trust (BAR), told the WSJ. “Lower rates, coupled with uncertainty surrounding Fed policy, is going to continue to be a positive for gold beyond the immediate future.”
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