‘Nervous’ investors pile into gold ETFs as tensions mount
Anxious investors from Germany to China are seeking shelter in gold ETFs.
Holdings in all bullion-backed exchange-traded funds tracked by Bloomberg extended their ascent to the highest since 2013, rising for a fourth straight session in the longest run since January. Xetra-Gold, the third-largest commodity-linked ETF, had almost 177 million shares outstanding as of Monday, the most since the Frankfurt-listed fund started trading in 2007.
While equities rebounded Tuesday after Chinese President Xi Jinping struck a conciliatory tone in remarks on trade disputes with the U.S., geopolitical angst is driving demand for gold as a haven. U.S. sanctions against Russian oligarchs may elicit a “harsh response” from the Kremlin, and Middle East tensions mounted after a suspected chemical-weapons attack in Syria.
“We’ve seen volatility risk in the stock market, and geopolitical risk concerning the situation in Russia and the Middle East,” said Michael Blumenroth, an analyst at Deutsche Bank AG who writes a weekly market report published on Xetra Gold’s website. “People have become nervous in Germany so they were buying gold.”
German investors aren’t alone. China’s Bosera Gold ETF has attracted US$610.8 million this year, putting it on course for the biggest annual inflow since it was listed in Shenzhen in 2014. New York-listed iShares Gold Trust has attracted US$1.49 billion in 2018, the biggest inflow of all commodity ETFs.
Gold futures for June delivery rose 0.4 per cent to settle at US$1,345.90 an ounce at 1:30 p.m. on the Comex in New York, a third straight gain. Spot-gold prices have rallied about 2.9 per cent this year, outperforming the S&P 500 Index of equities as the dollar weakens.