As uncertainty piles up, investors have shifted over to gold-related ETFs in droves, with physical gold-back ETF holdings rising by 1,000 tons since bottoming out in early 2016.
So far over the third quarter, the SPDR Gold Shares (NYSEArca: GLD) has attracted $2.8 billion in net inflows and iShares Gold Trust (NYSEARCA: IAU) brought in $1.1 billion in new inflows, according to ETFdb data. The gold-related ETFs are backed by gold bullion stored in a vault, so investors essentially gain direct exposure to physical gold through these ETFs.
The sudden influx in interest for safe-haven gold ETFs also brought total known ETF holdings to 2,424.9 tons on Wednesday, or their highest level since 2013, Bloomberg reports. Current physical gold holdings are now 1,000 tons above the post financial crisis nadir of 1,425.1 tons.
Demand for gold assets
Demand for safe-haven gold assets have surged this year as investors looked to protect their wealth from slowing global growth, a protracted U.S.-China trade war and quickly falling yields in the bond market, with an inverted yield curve that suggested the U.S. market could be heading toward another recession.
Furthermore, the Federal Reserve has signaled it is shifting to a loose monetary policy with interest rate cuts in light of the growth risks ahead.
Related: Gold ETFs List
Veteran investor Mark Mobius, who set up Mobius Capital Partners LLP last year after three decades at Franklin Templeton Investments, also endorsed gold as a long-term play that investors should be buying at any level.
Mobius joins other institutions and large investors that are backing the gold outlook like Goldman Sachs, which said prices will climb to $1,600 an ounce over the next six months. Goldman Sachs’s global head of commodities research, Jeffrey Currie, said gains will likely find support from demand for ETFs as well as increased central-bank purchases.
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