Gold-backed exchange-traded funds ended 2018 with new inflows globally as uncertainty about Britain’s exit from the EU drove investors to the perceived safety of European-backed ETFs, more than offsetting outflows in North America resulting from a strong U.S. dollar.
Gold-backed exchange-traded funds (ETFs) worldwide registered net inflows of $3.4 billion, a 3-per-cent annual rise and increased by 69 tons to 2,440 tons in the year.
This was the first year since 2012 that total gold-backed ETF holdings finished above $100 billion, at $100.6 billion, according to the World Gold Council.
Europe-based funds grew 10 per cent during 2018, or by 96.8 tons worth $4.5 billion, with Germany leading country inflows and UK-based funds following as concerns increased about Brexit.
North American gold-backed ETFs experienced outflows in 2018, as gold prices weakened during the third quarter, the World Gold Council said. Holdings in North American gold-backed ETFs declined 1.3 per cent by 13.4 tons worth $667.4 million.
Volatile stock markets in the fourth quarter drew some investors back to gold. During times of uncertainty, the precious metal is seen as a safe-haven alternative to stocks and other comparatively risky assets.
In August, spot gold prices hit their lowest in more than 19 months, with the U.S. dollar holding steady near a recent peak as concerns about a Turkey crisis and China’s economic health weighed on emerging market currencies.
Gold prices and North American gold ETF flows turned positive in October when stock markets worldwide had their worst October since the 2008 financial crisis.
Spot gold prices ended the year down 1.5 per cent from the previous year after rallying from August lows.
In December alone, gold-backed ETFs globally rose 3 per cent, adding 76 tons worth $3.1 billion, for a third-straight month of net inflows, largely driven by North American and European investment, World Gold Council data showed.