Inflows Into Gold ETFs Jump To Highest Since 2008 Amid Market Turmoil
“Uncertainties and gold go hand in hand,” says Motilal Oswal analyst Manav Modi.
Inflows into gold exchange-traded funds jumped to the highest in more than 11 years in February, as investors opted for haven assets amid a selloff in the equity market triggered by the novel coronavirus outbreak and a decline in crude oil prices.
Indians piled Rs 1,483 crore into gold ETFs in February, the most since October 2008, according to data released by the Association of Mutual Funds in India. That’s also the fourth straight month of inflows into such assets—the longest gaining streak since the global financial crisis.
Investments into gold ETFs came at a time India’s equity indices tumbled the most in 17 months in February, joining the worst global selloff since 2008 financial crisis, as the spreading Covid-19 threatens to stall economic growth. A pricing war in the crude oil market only pushed the equity markets globally into a free fall. By contrast, gold prices touched the $1,700-per-ounce mark for the first time in seven years. The prices of the yellow metal have surged 9.5 percent so far this year.
“There has been a marked interest in gold recently. The good thing here is that people are opting to invest in gold via the ETF route instead of buying it in physical form,” NS Venkatesh, chief executive officer at AMFI, said, adding this trend is expected to continue, given the uncertainty in the market.
Manav Modi, research analyst at Motilal Oswal, said, “Uncertainties and gold go hand in hand. We expect that with easing of balance sheets and more liquidity being pumped in the market, gold prices are likely to gain further.”
The brokerage continues to maintain a positive stance from a 15-18-month perspective and expects gold prices to go up to as much as Rs 47,000 per 10 gram.
