Monthly statistics from the World Gold Council show that global gold-backed exchange-traded funds struggled in January despite the precious metal having its best start to the year in a decade. While gold prices climbed more than six per cent, investors sold their ETF holdings in gold for the ninth month running with 26 tonnes of gold worth US$1.6 billion flowing out of ETFs last month. Inflows into North American funds were outpaced by withdrawals in Europe and Asia. WGC analysts, however, see indications that the market is beginning to change and may result in a long-lasting rebound. "While European outflows have masked nascent North American inflows, our analysis suggests that futures historically lead ETFs which could entice a more sustained rally," they say. In addition, despite low ETF interest, market volume and investment activity are both increasing. The huge demand for gold by central banks is one important element reviving the gold market.
- PWC