Gold ETF Sees Inflow Despite Lower Demand for Precious Metal

ETF Trends

Overall demand for gold slowed in the third quarter although the largest ETF tracking the precious metal continues to see cash move in the door.

The World Gold Council said that about 1,085 metric tons of gold was sold globally in the three months through September, down 139 metric tons, or 11%, from the record 1,223.5 tons in the same quarter year-over-year, reports Kelvin Chan for the Associated Press.

Notably, European investors were “less aggressive” in their purchases, accounting for over half of the drop in gold bullion demand. Additionally, gold demand in China, the world’s second largest consumer of gold, “lost further momentum” as demand declined 8%.

“This was particularly noticeable among the middle classes whose purchases of 18-carat gold jewelry were among the worst casualties,” the report said.

Still, SPDR Gold Shares ETF (GLD) remains popular and has posted inflows of more than $1 billion since the end of September.

The World Gold Council projects that Chinese demand will recover once the holiday gift giving season approaches and potential stimulus measures are added as the new leaders take office.

Moreover, the industry group noted that investors were still hoarding gold at historically high levels and that the third quarter results looked weaker only because they were compared with “extraordinary levels of demand” last year – gold prices hit a record $1,921.15 an ounce on Sept. 6, 2011. [Gold ETF Metal Holdings Rise on Investment Demand]

India, the world’s largest gold consumer, saw demand increase 8% to 223.1 tons. [Gold ETFs and Diwali]

Other gold ETFs include:

  • iShares COMEX Gold Trust ETF (IAU)
  • ETFS Physical Swiss Gold Shares ETF (SGOL)
  • Powershares DB Gold Fund ETF (NYSEArca: DGL)
  • ETFS Physical Asian Gold Shares ETF (NYSEArca: AGOL)

For more information on gold, visit our gold category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

View Comments