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Italian Turmoil Boosts May's Global Gold ETF Demand - WGC

Kitco News

(Kitco News) - Gold held by global exchange-traded funds increased by 15 tonnes in May, led by increased activity in Europe and Asia, according to the World Gold Council (WGC).

Holdings stood at 2,484 tonnes at the end of the month, the organization said Wednesday.

This was the third straight month of inflows, which followed April’s impressive increase of 72.2 tonnes that marked the largest level of inflows in more than a year, the WGC added.

May’s gains were driven by Europe and Asia, which added 25.6 tonnes and 20.8 tonnes, respectively.

“Political turmoil in Italy” was largely responsible for encouraging European buyers’ interest, said WGC director of investment research Juan Carlos Artigas.

In contrast, North American funds reversed their positive 2018 trend and posted a loss of 29.6 tonnes, the WGC report noted.

“[North American losses were] likely a result of the volatile prices in the gold market which left gold lower by 60bps (in dollar terms) on the month,” the WGC said. “After [a] strong early-year performance, gold has given back much of its gains, remaining largely flat on the year, despite the USD rallying over 4% in the second quarter.”

Looking at individual ETFs, European Xtrackers Physical Gold attracted the most interest last month, with its holdings rising by 23.2 tonnes.

Asian demand was boosted by China’s Bosera Gold ETF, with additional 19.6 tonnes of holdings added in May.

The world’s largest gold-backed fund, SDPR Gold Shares (NYSE: GLD), was the main downward driver behind North American outflows, losing 24.2 tonnes, while iShares Gold Trust (NYSE: IAU) lost 2.4 tonnes.

Gold ETFs usually trade similar to stocks, but they track the price of the commodity, with the physical metal placed safely into storage to back the ETF shares. ETF advocates say that this method provides exposure to the yellow metal without the hassle of assaying, insuring, and storing the metal.

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