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Annual GLD gold holdings rise at fastest pace in three years

Kitco News

Editor's Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It's a showdown of global proportions, so don't miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

(Kitco News) - For many analysts 2019 will go down in history as the year that gold finally popped on the radar screens for investors as demand for gold-backed Exchange Traded Products reached unprecedented levels.

As we close the books on 2019, data from the world’s biggest gold-backed ETF, SPDR Gold Shares (NYSE: GLD), shows its precious metal holding increased by 97.94 tons in the year to 893.25 tons. GLD’s gold holdings increased at their fastest pace since 2016, which saw a 178.80 ton increase.

However, the ETF’s annual gain only tells part of the investment picture in what was an incredible year. In September, as gold prices hit their highest level in six years, GLD saw its holding rise to 924.94 tons, the highest level since the product was launched more than 15 years ago.

Investors started to jump back into gold in early summer as the Federal Reserve abruptly reversed course on monetary policy and cut interest rates three times in an attempt to ward off growing recession fears in the global marketplace.

Gold prices and ETF holdings have fallen from their September high; however, the market has remained fairly elevated through the end of the year, even in the face of improving investors sentiment and record valuations in equity markets.

Although the Federal Reserve is ready to hold interest rate at their current levels through 2020, analysts say that there is enough uncertainty to continue to support gold prices.

“While equities are surging there are still worries in the marketplace and I think you will continue to see investors move into gold,” said Ryan McKay, commodity strategy at TD Securities.

McKay added that because of the weak health of financial markets, any central bank decision could be good for gold.

“If growth starts to deteriorate the Federal Reserve won’t hesitate to cut rate further,” he said. “However, if the U.S. economy starts to pick up the Fed will be reluctant to raise interest rates. In either scenario real interest rates are going to fall and that will be good for gold.”

Phillip Streible, chief market strategist at Blue Line Futures, also said that he expects to see gold ETF investment demand to remain strong through 2020. He explained that global central banks are still in a race to the bottom.

“There is no better time than right now for investors to divest themselves of equities and add precious metals to their portfolio at these lower prices,” he said.

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.