Gold ETF: The trend of tremendous investment demand in gold came to a halt in November. The figures of Gold ETF point towards this. According to the latest data from the World Gold Council, at the global level, after 6 months of continuous inflow, outflow was seen in November in Gold ETF. This was also a major reason for the fall in gold prices last month.

There is a softening in gold prices at the moment. In the global market today, Friday, December 6, spot gold fell to its lowest level since November 26. Currently,, it is trading at around $ 2,640 an ounce. Earlier, after four consecutive months of rise, gold prices declined during November. Gold fell more than 3 percent in the global market in November. This is the worst performance for gold in a month after September 2023.

According to the data othe f the World Gold Council, after the increase in investment for six consecutive months (May-October), investment in gold ETF decreased in November. According to the data, last month, investment in gold ETF decreased by 2.1 billion dollars or 28.6 tonnes at the global level. Last month, inflow was seen only in North America. Whereas outflow was recorded in Europe, Asia,, and other regions. In Europe, investment in gold ETF decreased for the 11th consecutive month in November.

Till November this year, investment in gold ETFs has increased by $2.6 billion. Even before May 2024, outflows were seen in gold ETFs at the global level for 12 consecutive months.

(Source: World Gold Council)

According to experts, after the Chinese central bank stopped buying, gold has received the most support from investment i.e. ETF demand. If the ETF demand remains sluggish in the future, then pressure can be seen on gold. However, great buying is still coming from the central banks of other countries including India. Along with this, geo-political tension at the global level is also supporting the demand for gold as a safe haven.

Apart from this, there is still a strong possibility in the market that the US central bank may once again cut interest rates by at least 25 basis points i.e. 0.25 percent in its December meeting. If interest rates in the US come down further, gold is bound to get more support. There is no interest/yield on gold, so when interest rates go down, the demand for this asset class increases as an investment.

Experts believe that if other big central banks, including the US, continue to cut interest rates further, investors in Western countries may increasingly turn towards gold and gold may witness a more sustainable rise in the future.

According to data received from China's central bank, the People's Bank of China (PBoC), there was no change in China's gold reserves in October for the sixth consecutive month. However, experts believe that given the fall in gold prices and the changing geo-political scenario after Trump's victory, China's central bank may start buying gold again.

Till April this year, China's gold reserve had seen an increase for 18 consecutive months. During April, China's gold reserve increased by 2 tonnes to 2,264 tonnes. However, this was the lowest increase in China's gold reserve in 18 months. Compared to October 2022, this is about 319 tonnes i.e. 16.5 percent more. From this time onwards, the Central Bank of China started sharing information about monthly gold purchases again. Gold prices have also increased by about 50 percent during this period i.e. after October 2022.

At the end of October 2022, China's total gold reserves stood at 1,948.32 tonnes, while its share in the total reserves was 3.19 percent.

Currently, the share of gold reserves in China's total forex reserves is 4.9 percent, i.e. at an all-time high. During the first 4 months of the current calendar year, China's gold reserves increased by 29 tonnes, i.e. 1.3 percent. China's central bank had increased its gold reserves by 225 tonnes during 2023.

There was sluggishness in Gold ETF even before May   2024

Excluding the period of March-May 2023, investment demand remained in the negative zone from April 2022 to April 2024. Investment in gold ETFs increased by $ 49.4 billion (892.1 tonnes) in 2020. However, after that in 2021 and 2022,  it decreased by $ 8.9 billion (188.8 tonnes) and $ 2.9 billion (109.5) tonnes respectively. During the calendar year 2023, a total of $ 14.7 billion (244.4 tonnes) was withdrawn from gold ETFs.

(Source: World Gold Council)