Gold ETF assets realised their largest ever quarterly gain in Q1 2020

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Gold ETF assets realised their largest ever quarterly gain in Q1 2020

Adam Perlaky
Senior Analyst, Americas
World Gold Council

Posted:

Today we released our analysis on gold-backed ETF flows for the first quarter of 2020, as well as the month of March.

Q1 2020 highlights

  • Global gold-backed ETFs (gold ETFs) and similar products added 298 tonnes(t), or net asset growth of US$23bn, across all regions in the first quarter of 2020 – the highest quarterly amount ever in absolute US dollar terms and the largest tonnage additions since 2016.
  • During the past year, gold ETFs added 659t, the highest on a rolling annual basis since the financial crisis, with assets under management (AUM) growing 57% over the same period.

 

March highlights

  • Globally, gold ETFs added 151t – net inflows of US$8.1bn (+5%) – in March,
  • New all-time highs of holdings at 3,185t.
  • Gold ETFs continued their growth outside of the US

 

Price performance

  • Gold price behaviour was similar to the financial crisis where capital requirements initially hurt liquid and outperforming assets like gold.
  • Much like 2008, when QE was announced, gold rallied back strongly and finished the month mostly unchanged at US$1,609/oz, as the realised volatility of gold across tenors rivalled levels last seen during the European credit crisis in 2011 and the implied volatility – or how much investors expected gold would move across tenors – reached levels last seen during the global financial crisis.

 

Looking forward

  • Recent drivers of investment demand are expected to continue namely, widespread market uncertainty and the improved opportunity cost of holding gold as yields move lower
  • In the three years following the 2008 Lehman bankruptcy and subsequent QE, gold rallied over 600% from peak to trough and gold ETFs grew their holdings by over 100%
  • If the trend mirrors the financial crisis, we could see significant inflows in gold ETFs over the coming months, which has been the case to begin the month of April.

 

To read the full analysis please click here

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