Global gold-backed ETFs and similar products added 61 tonnes(t), or net inflows of US$3.1bn, in January across nearly all regions, boosting holdings to new, all-time highs of 2,947t.1 Combined with a gold price increase of nearly 5%, assets under management (AUM) grew 8% in US dollars during the month.
Gold demand fell 1% in 2019 as a huge rise in investment flows into ETFs and similar products was matched by the price-driven slump in consumer demand.
Global gold-backed ETFs and similar products had US$19.2bn, or 400 tonnes(t), of net inflows in 2019 in almost all countries, after holdings rebounded in December. Collective ETF holdings reached all-time highs of ~2,900t in the fourth quarter. Overall, global gold-backed assets under management (AUM) grew 37% in US dollars during the year as a result of positive demand combined with an 18.4% increase in the gold price.
Risk appetite amid high uncertainty
As we look ahead, we expect that the interplay between market risk and economic growth will drive gold demand in 2020
In November, global gold-backed ETFs and similar products saw US$1.3bn of net outflows across North America, Europe and Asia, decreasing their collective gold holdings by 30.1 tonnes(t) after reaching record highs in October. Global gold-backed assets under management (AUM) have grown 35% this year as a result of increased investment demand and price appreciation.
Holdings in global gold-backed ETFs and similar products rose by 69 tonnes(t) to 2,440t in 2018, equivalent to US$3.4bn of inflows. Global gold-backed ETFs grew 3% in 2018, driven by strong growth in European funds and increased global inflows during December.** This is the first time since 2012 that the value of total gold-backed ETF holdings has finished the year above US$100bn.
Surge in ETF inflows supports Q3 gold demand growth. Gold demand grew modestly to 1,107.9t in Q3 thanks to the largest ETF inflows since Q1 2016
The global bullion banking industry is large and well-established with annual revenues estimated at more than US$1.5bn. The market includes both international banks and smaller local players.
Re-optimising portfolio structures for lower future expected bond returns suggests investors should consider an additional 1%-1.5% gold exposure in diversified portfolios.