Gold ETFs see record inflows in Asia, particularly in China and India, amid market volatility and high gold prices. Global gold demand rises, with strong investment from Asian markets.
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Global gold exchange-traded funds (ETFs) have seen positive demand for the first time in 2024, with year-to-date inflows reaching 18 tonnes, according to the World Gold Council.
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Asian markets are driving this surge, pushing total assets under management (AUM) up by an impressive 33 per cent. Inflows in gold ETFs have reached a significant USD 4.7 billion this year. In October alone, Asian gold ETFs attracted USD 2.1 billion, marking the region’s 20th consecutive month of inflows.
China has been a major contributor, with record-breaking investments in gold ETFs. This surge is largely driven by soaring local gold prices and increased volatility in the stock market. A series of stimulus measures announced in late September further fuelled the demand, resulting in the highest monthly inflow on record.
India, too, has experienced steady growth in gold ETF investments. Positive trends in gold prices, alongside fluctuations in the stock market, have increased gold’s appeal as a stable asset. Recent changes in India’s long-term capital gains tax treatment for gold have also contributed to a rise in interest among investors.
As per the World Gold Council, improved trading volumes in over-the-counter (OTC) markets and an increase in ETF activity have strengthened global gold demand. With global gold prices remaining high and stock market volatility continuing, gold is becoming an even more attractive investment.
This growing interest in gold has led to a rise in gold ETFs, elevating their assets to their highest levels in 2024. As geopolitical and economic uncertainties persist, gold ETFs are likely to remain an attractive choice for investors seeking stability.
In North America, gold ETFs saw inflows for the fourth consecutive month in October, with USD 2.7 billion added to the sector. Despite the rise in bond yields and a stronger US dollar – factors that typically reduce interest in gold – investor concerns over uncertain interest rates, bolstered by robust US economic performance, continue to support gold as a safe-haven asset. The ongoing US presidential election and escalating geopolitical tensions, particularly in the Middle East and concerning Russia’s involvement in Ukraine, have further driven demand for gold.
In contrast, European gold ETFs saw outflows of USD 563 million in October, with losses spreading across major markets rather than being concentrated in the UK, as seen in previous months. Rising yields on European government bonds, coupled with a recent 25-basis-point rate cut by the European Central Bank, have increased the opportunity cost of holding gold. The strengthening US dollar, along with weakening local European currencies, has further diminished the appeal of gold in Europe.
Other regions have reported positive inflows for the fifth consecutive month. Australian and South African funds collectively added USD 68 million in October. In Australia, a weakening Aussie dollar boosted gold returns for local investors, which led to increased currency hedging activity.
As per ANI, these trends suggest that, while some regions experience setbacks, gold remains an important asset for many investors globally, particularly in Asia, where demand continues to rise.
(With inputs from ANI)
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