Flows into gold ETFs over January were positive across North America, Europe and Asia, with North American funds leading the global inflows as momentum investors turned to the most liquid U.S.-listed ETFs while others looked to the cheapest ETF options.
“We believe this is linked to strategic allocations. Brexit uncertainty was a primary driver of investment demand in the UK and Europe,” the World Gold Council said.
Finding Safety in Gold
While global equities have bounced back off the Christmas Eve lows and finished the month up around 7% on average, marking their best monthly start of the year since 2003, investors remain cautious of the future outlook and continued to find safety in gold.
“Market uncertainty remains a concern, especially as the impact of the US Government shutdown is yet to be assessed, Brexit is far from being resolved and trade negotiations continue. In addition, the Fed has signaled a ‘wait and see’ approach and other central banks may follow suit. We anticipate this will support gold prices,” the World Gold Council added.
Specifically, the WGC predicts three outcomes in the year ahead: Increased market uncertainty and the expansion of protectionist economic policies will make gold increasingly attractive as a hedge. While gold may face headwinds from higher interest rates and US dollar strength, these effects are expected to be limited as the Fed has signalled a more neutral stance. Structural economic reforms in key gold markets will continue to support demand for gold in jewellery, technology and as means of savings.
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