By any measure, gold-backed ETFs and similar products (gold ETFs) had a remarkable year in 2020. Globally, gold ETFs had record annual net inflows of US$47.9bn, or 877 tonnes(t), collectively increasing their gold holdings by over a third, reaching all-time highs in tonnage (3,752t).
Gold-backed exchange-traded funds and similar products (gold ETFs) have flourished since their introduction in 2003, attracting both institutional and retail investors across the globe. Recently, gold has become globally accepted as a strategic asset amidst a high-risk and low-rate environment spurring investment demand and the expansion of the gold-ETF market.
Demand for gold loans, both through banks and non-banking financial companies (NBFCs) has grown in response to the economic impact of the COVID-19 pandemic.
China’s physical gold investment market has come a long way since its liberalisation in 2004. Primarily driven by the strong economy, retail physical gold investment demand in mainland China has surged by nearly 17 times in the past 16 years, accounting for nearly one third of the world’s total annual bar and coin demand in 2019.
Strong growth in global investment demand for gold in Q3 partly offset weakness elsewhere as COVID-19 remained in the driving seat.
Gold-backed ETFs and similar products (gold ETFs) recorded their tenth consecutive month of net inflows during September, matching equivalent stretches in 2008 and 2016. Gold ETF holdings increased by 68.1 tonnes (t) (US$4.6bn) or 2.0% of assets under management (AUM) despite gold’s worst monthly price performance since November 2016. Global net inflows of 1,003t (US$55.7bn) in 2020 have led overall gold investment demand and taken the gold ETF holdings universe to a fresh new all-time high of 3,880t and US$235bn in AUM.