Holdings in global gold-backed exchange-traded funds (ETFs) and similar products rose by 3 t in March, to 2 483 t, equivalent to about $183-million in inflows, the World Gold Council (WGC) reported on Thursday.

The WGC said global assets under management fell by 1.6% in dollar terms to $103-billion over the month, driven by the 2% decline in the price of gold during the same period.

However, global gold-backed ETF flows remain positive year-on-year on the back of strong January inflows.

All regions, meanwhile, saw marginal increases in holdings, while by month-end, North American funds had fully reversed the $2-billion in outflows seen earlier in the month.

The reversal coincided with a rally in gold, in dollar terms, which was linked to the Federal Reserve Board’s (Fed’s) adoption of a more neutral monetary policy stance.

The WGC’s report, titled ‘The impact of monetary policy on gold’, finds that, historically, a change in the Fed’s policy from tightening to neutral results in gold increasing meaningfully over the subsequent 12 months.

In March, gold trading volumes increased by 15% above the 2018 averages to about $125-billion a day.

Sentiment and positioning in COMEX futures continued to increase from their lows, as the price of gold moved higher during the second half of the month. However, these levels still remain below historical averages, the WGC warned on Thursday.

According to the WGC, US stocks had their strongest quarterly performance in a decade in the first quarter of the year, which was, in part, supported by a decline in bond yields.

“However, the extent of the divergence in expectations about the strength of the economy between stock and bond investors is noteworthy. The rebound in stocks has again pushed valuations to historically high levels, signaling confidence by investors,” the WGC said, adding that bondholders appear to have a more pessimistic view of the global economy.

This decoupling between stock and fixed income markets, combined with US/China trade relations and Brexit uncertainty are some examples of dynamics that continue to worry investors, the council warned.

However, in looking forward, the WGC believes financial market uncertainty, as well as the shift in monetary policy and possibly a range-bound dollar, will support investment in gold.