Gold Investment Demand Mainly Driven by ETF Inflows

SEATTLE (Scrap Monster): The latest market report released by the World Gold Council (WGC) noted that allocation to gold by global investors rose rapidly in 2020. The main driver for the rise in global investment demand for gold during the year was inflows into global gold ETFs. The year-to-date net inflows into gold-backed ETFs totalled 1,003 tonnes in tonnage terms and $55.7 billion in value terms.

According to WGC, the global investment demand for gold has outclassed gold consumption till date this year. The investment demand accounted for 55% of the total gold demand during the first three quarters of the current year. This compares with the demand situation in 2003, when demand for gold used in jewellery and technology had made up almost 90% of the total demand.

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Gold ETFs have been the preferred choice of fold investment, in the midst of other options including vaulted gold, mining stocks, gold bars and coins. This is on account of several reasons including cost efficiency, transparency and liquidity, WGC said.

The increasing number of listed global gold ETFs, especially outside of the U.S. has enabled non-U.S. gold investors to easily gain access to these products.

Looking ahead, the Council believes that investors’ confidence in the role of gold as a strategic asset could further strengthen in the years to come. The investor safe-haven demand is likely to remain high, driven by rising global economic uncertainties.