The market value of assets in gold funds increased by 37 percent last year, reaching 141 billion dollars.
The World Gold Council (WGC) has released its 2019 Global Gold-based Fund Flow Report. According to the report, the amount of gold in gold funds increased by 400 tons last year, reaching 2 thousand 881 tons, and reached 92 thousand 634 on an ounce basis.
While these figures recorded as of the end of 2019 indicate the highest levels of all time, the market value of assets in gold funds increased by 37 percent on an annual basis and reached 141 billion dollars in 2019. The 18.4 percent increase in the ounce price of gold contributed to this increase.
The year-end closing record in terms of market value was achieved in 2012 with a level of 147 billion dollars. Although equity markets rose to record levels in 2019, gold prices exhibited their best performance in the last 10 years.
The “dovish” policies of central banks and the uncertainties caused by trade wars directed investors to gold in 2019.
While the demand for gold from traditional “safe havens” has increased significantly, gold funds have become effective players in this trend.
Risks from 2019 may continue in 2020
According to the report, monetary expansion was the most important supporter of gold prices. “Hawkish” or neutral stances were identified as the main factors suppressing the gold price.
While low bond interest rates played an indirect role in gold replacing bonds, the increase in the alternative cost of not investing in gold also supported gold demand.
According to the report, which includes predictions for 2020, geopolitical risks that supported gold prices in 2019 may remain valid for 2020 as well.
According to the report, while expectations that the US Federal Reserve (Fed) will not cut interest rates remain strong, repo operations will continue to maintain their importance. Repo operations were perceived by some people as a kind of monetary expansion due to the liquidity provided to the market.
The fact that trade negotiations between the USA and China have not yet reached an official conclusion has enabled risks to continue to be priced.
While stock markets at record levels and very low bond yields make some investors nervous, volatility may support gold prices.
According to the report, gold may be the first port of call for investors in case of a possible selling pressure.
North America is the leader in gold assets
The Fed’s interest rate cut after 11 years and the continuation of geopolitical tensions affected the markets in 2019. While gold held in North American funds increased by approximately 206 tons, money flow to funds increased by 14.4 percent and reached 10.1 billion dollars.
European funds bought 188 tons of gold last year. This increase was influenced by the movements in UK funds, which spent most of the year under the influence of Brexit uncertainty. Last year, money flow to gold funds in Europe increased by 13.6 percent, reaching 8.8 billion dollars.
On the other hand, the amount of gold held by Asian funds remained close to flat in 2019, decreasing by 0.1 tons. The money flow in these funds also decreased by 0.3 percent, falling by 12 million dollars.
While the money flow in funds in other regions increased by 16.3 percent on an annual basis, Australia had a great impact on this increase. The amount of gold in funds outside North America, Europe and Asia increased by 6.3 tons and the money flow in the funds amounted to 311 million dollars.
Thus, last year, the market value of assets in gold funds was 70.5 billion dollars in North America, 64.7 billion dollars in Europe, 3.9 billion dollars in Asia and 1.9 billion dollars in other regions.
Money flow in US funds is $10.3 billion
On a country basis, the USA ranked first in money flow to gold funds in 2019, with approximately 10.3 billion dollars. While the market value of the assets in the country’s gold funds reached 67.4 billion dollars, the amount of gold was 1376.1 tons.
In terms of gold fund assets, the USA was followed by the UK with 582.4 tons and Germany with 367.6 tons.
While Turkey ranked 15th in the said ranking with its gold fund assets of 0.64 tons, the total value of gold held in the country’s funds was recorded as 32 million dollars.
Source: https://www.aa.com.tr/tr/ekonomi/kuresel-fonlar-2019da-altin-yatiriminda-rekor-kirdi/1700112
