Gold ETF Holdings Reach a Record High Since 2012

The conflict between US and Iran at the beginning of 2020 has driven gold price to a seven-year‘s high, and the continuously spreading novel coronavirus in the past few weeks has triggered the market’s apprehension, driving global investors into the safe-haven of gold. In addition, as the market expects the Federal Reserve to keep interest rate at the current low level, market capitals poured into bullion-backed exchange-traded funds(ETF), and gold reserve of global exchanges has reached a record high in many years.

A survey from Bloomberg shows global holdings of gold ETF soared to 2,573.9 tons last week. The last time global holdings of bullion-backed ETF reached such level was in December, 2012, when the US Federal Reserve kept interest rate at a near-to-zero level and expanded its QE asset purchase programme to boost growth and reduce unemployment rate, thus creating favourable conditions for holding gold.

Gold closed with a decade-record growth in 2019, gaining 18% throughout the year, so gold ETF had been in a positive trend even before the virus outbreak. Also, it‘s estimated that the US dollar will remain weak throughout the first half of 2020, which further provides engine for gold’s surge.

We expect more fluctuations from the market this year due to various risk factors, and gold has a unique strength in light of assets diversification. In order to deal with the complicated macroeconomic situation more flexibly, investors need to diversify their portfolio with various types of assets.