ETFs tracking the rallying gold price reached $239 billion in global assets under management at the end of July, with Swiss and German investors among the main buyers.
According to the World Gold Council (WGG) gold ETF and similar product had eight months of inflows, with gold reaching a record highs and surpassing $2,000/oz in the first few trading days of August.
Adam Perlaky, manager, investment research at WGG, said ongoing global economic uncertainty and low real interest rates should continue driving gold demand for the remainder of 2020.
“Geopolitical and macroeconomic conditions suggest that strong gold investment demand and price performance will be more of a marathon than a sprint and will likely go the distance in H2 2020,” he said.
Fund manager Invesco says its Invesco Physical Gold ETC has seen more than $3.5 billion of inflows this year.
Chris Mellor, head of Emea ETF equity and commodity product management at Invesco, said: “Investors have looked to gold for two main reasons. First as a safe haven during the COVID 19 crisis, helping to protect portfolios against the potential impact of the recession on corporate earnings and therefore risk assets such as equities or corporate bonds.
“Second, it is seen as a hedge against inflation: if the economic impact of the crisis proves short-lived, with the degree of stimulus and the size of government debts then there is a risk that inflation could return and a real asset such as gold is therefore appealing.
He added that gold supply and demand have been affected by Covid-19 restrictions but investment demand has helped to lift prices despite slower jewellery purchases.
Mellor also said disruption in the futures market is a driver for gold exchange-traded products. Gold futures are trading at a roughly $15 premium to the spot price – up from $2 before the crisis. This makes investing in gold through futures a more expensive approach than for Invesco’s fund, he said.
Invesco said inflows to its product were equal to more than a quarter of all flows into European-domiciled gold ETCs and it is now Invesco’s largest European product with $13.5 billion of assets under management.
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