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Gold ETFs Showed Their Luster in October

This article was originally published on ETFTrends.com.

After a tumultuous month that sent U.S. equities reeling in risk-off selling, gold and related exchange traded funds benefited from a flight to safety, with the precious metals market experiencing a significant shift in trends.

Gold-backed ETFs, such as the SPDR Gold Shares (GLD) , shined last month.

"With the worst October for global stock markets since the 2008 financial crisis, global gold-backed ETFs and similar products benefited from the flight-to-safety trade,” Juan Carlos Artigas, World Gold Council’s Director of Investment Research, said in a note.

According to the World Gold Council, October ETF flows revealed a significant trend shift from the past several months.

“COMEX futures became slightly positive but remains well below historical averages. Given our research indicates that, historically, such positioning often precedes rallies in gold price, we think this remains a key trend to monitor,” Artigas said.

For starters, global gold-backed ETFs and similar products attracted $1.0 billion in net inflows, following the deceleration that started in September. Meanwhile, global assets under management climbed 3.1% from September.

Supporting the sudden surge, gold experienced a positive price performance of 2.3%, which the World Gold Council argued was a key driver of inflows in North American and European funds, closing out the month with inflows of $561 million - an 1.2% increase in AUM, and $678 million - a 1.7% increase in AUM, respectively.

Additionally, U.S. dollar-hedged gold also capitalized on the stronger dollar and risk-off sentiment, advancing 4.3% for the month. Gold and the U.S. dollar have historically exhibited an inverse correlation, but gold investors could use the SPDR Long Dollar Gold Trust (NYSEArca: GLDW) as a way to diminish USD currency risks. GLDW incorporates a currency swap mechanism to effectively gain exposure to gold paid for in foreign currencies, rather than in dollars. Investors can look to GLDW in environment where the dollar is strengthening.

For more information on the gold market, visit our gold category.

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