Gold prices rising on ETF inflows

World Gold Council (WGC) on Thursday said that increased inflows in gold-backed ETFs (Exchange Traded Funds) have fueled rise in gold prices around the world.

While overall gold demand fell, record inflow was witnessed into gold-backed ETFs of 734 tonne. The global response to the pandemic by central banks and governments, in the form of rate cuts and massive liquidity injections, fuelled these record inflows, said Somasundaram PR, Managing Director for India at WGC said, Inflows into gold ETFs accelerated in Q2 (April-June 2020), taking H1 inflows to a record-breaking 734 tonne. First half inflows surpassed the previous annual record from 2009 of 646 tonne and lifted global holdings to 3,621 tonne.

Further the US dollar gold price gained 17 per cent in H1, following a 10 per cent increase during Q2. Strong inflows into gold-backed ETFs fuelled the rise. The gold price reached record highs in numerous other currencies, including euro, sterling, rupee and renminbi, among others. The price is currently a life-time high of over Rs 50,000 per 10 grams, a key milestone and response is naturally mixed – with content investors and wary consumers and to put it in perspective, gold prices have risen by 60 per cent since January 2019 and 20 per cent since January 2020, income growth or expectation have not kept pace with this, Somasundaram said.