InvestorQ : Is it true that global ETFs have been aggressively selling out their gold holdings?
Aditi Sharma made post

Is it true that global ETFs have been aggressively selling out their gold holdings?

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Mahima Roy answered.
8 months ago
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Gold prices have corrected sharply since August last year. Back then, gold had scaled a new high price of $2,072/oz and has since corrected sharply from higher levels. It is now trading around $1710/oz levels and while the correction is just about 15% from the peaks, it has resulted in a number of gold exchange traded funds or ETFs winding down their gold positions substantially. It could indicate that the short-term outlook is bleary.

Gold that is held by ETFs or exchange traded funds is normally considered to be hot money holdings unlike the central banks that hold gold for a long-term perspective. That was evident this week after the gold ETF AUM data clearly showed that the quantum of gold held by ETFs globally had fallen sharply by 84.7 tonnes valued at $4.6 billion in February. The gold selling trend has been going on since December 2020 and continued through February.

According to the World Gold Council or WGC, rising bond yields had substantially reduced the holding interest in gold as an asset class. That is largely because it had raised the opportunity cost of holding gold. The COVID pandemic had led to a surge in demand for gold last year as a safe haven and that had resulted in gold prices in the global spot market scaling $2,072/oz in Aug-20. Overall ETF gold holdings fell to 3,681 tons valued at $207 billion.

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