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Fearful Investors Are Creating A Rush On Gold ETFs

Kitco News

Fearful Investors Are Creating A Rush On Gold ETFs

(Kitco News) - Investors are on a buying spree and their preferred choice in these uncertain times is gold ETFs.

The popularity of gold-backed exchange-traded funds is at its highest level since 2013, Bloomberg reported.

On Monday, the gold ETFs tracked by the financial media company were on the fourth day of straight gains, the longest green streak since January.

One of the shining examples is Frankfurt-listed Xetra-Gold —the third-largest commodity-linked ETF — that saw its outstanding shares approach 177 million as of Monday, the most since the fund began to trade in 2007.

The key drivers pushing investors to opt for gold ETFs are trade war fears as well as increased geopolitical risks surrounding Russia and the Middle East, according to analysts.

"In the past few days, neither central banks’ monetary policy nor other events had much of an impact on the markets. In fact, markets moved in line with the news and opinions surrounding the trade conflict between the US and China,” said analyst at Deutsche Bank AG Michael Blumenroth in a note published on Xetra-Gold’s website on Friday.

“We’ve seen volatility risk in the stock market, and geopolitical risk concerning the situation in Russia and the Middle East,” Blumenroth added. “People have become nervous in Germany so they were buying gold.”

Other impressive gains came from China’s Bosera Gold ETF, which already added $610.8 million this year, putting it on track to see its biggest returns since being listed in Shenzhen in 2014.

Also, the well-known iShares Gold Trust ETF has seen an addition of $1.49 billion in 2018 — the most out of all commodity-linked ETFs.

Gold prices, in the meantime, proved to be resilient in light of a stock market rally this week. June Comex gold futures were last at $1,345.40, down 0.04% on the day, while spot gold on was last at $1,341.40, up 0.16% on the day.

Gold saw gains on Tuesday despite investor risk appetite returning to the market, said Kitco’s senior technical analyst Jim Wyckoff.

“Gold and silver bulls should consider their metals’ performance so far this week as pretty impressive, given little risk aversion in the marketplace, at present,” Wyckoff said in his PM Roundup. 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.