Global gold-backed exchange-traded funds (ETFs) grew by 3% in 2018, and were driven by strong growth in European funds and increased global inflows during December, the World Gold Council’s monthly gold ETF/exchange-traded product (ETP) report, published on Tuesday, shows.
This, the report highlighted, was the first time since 2012 that the value of total gold-backed ETF holdings had ended the year above $100-billion.
The 2018 inflows were driven primarily by European funds, which grew by 10%, or about $4.5-billion, over the year.
However, for a second consecutive year, the report notes that Germany led country inflows, adding $2.6-billion.
UK funds followed with inflows of $1.7-billion, largely as a result of the uncertainty surrounding Brexit.
On an absolute basis, North American funds – which, according to the report, tend to be more price and momentum driven – led outflows, and were driven by the weak performance of gold during the third quarter.
However, the report states that these flows reversed in the fourth quarter, which made up most of the previous losses.
Low-cost US ETFs were “a bright spot” in North America, and raised $775-million in assets. This, the report said, was a sign of increased demand for holding gold as a long-term strategic asset.
Further, many funds in Asia and other countries had outflows, likely driven by profit taking.
The weaker emerging currencies, many of which fell by 10% to 20%, boosted local returns of gold and highlighted its global nature.
Overall, the report stated that gold trading volumes grew by 2% year-on-year, driven by growth in global gold futures markets. Gold markets’ trading volumes averaged between $100-billion and $125-billion a day in 2018.