With gold ending September at an all-time high, Australia’s largest physical gold ETF issuer, Global X ETFs, experienced a record surge in gold ETF inflows, marking its strongest month ever while also reclaiming market share – and gold investment strategist Justin Lin sees even stronger months ahead as investors seek safe-haven assets and gold targets US$4,000.
Ahead of a possible US government shutdown that is supporting demand for gold, the precious metal has today hit US$3,875.53 an ounce, building on Tuesday’s peak and several prior records set in September.
“With gold’s spectacular rise, Global X’s suite of physical gold ETF saw $136.5 million in net inflows this September, the largest one-month flow ever, beating the prior record month of March 2020,” said Lin.
“Most has gone into our Global X Physical Gold Structured Product (GOLD), the world’s first gold ETF, and the currency-hedged version, Global X Gold Bullion (Currency Hedged) ETF (GHLD), has also seen strong demand.
“Investors are flocking to gold to hedge tail risk as the US government shuts down – falling interest rates and a weakening US dollar are also driving gold buying,” Lin said.
“More broadly, physical gold ETFs on the Australian Stock Exchange (ASX) enjoyed a total $180 million in net inflows over the month, with Global X capturing around 75% of all gold ETF flows in Australia. Over the year to date (YTD), Global X’s market share stands at just over 60%.”
With September flows included, this brings YTD inflows into Global X’s gold ETF suite to $494 million.
“Total Australian gold ETF flows now sits at $819 million, which is on track to smash the record set in 2020,” said Lin. “Gold’s strong appeal in this environment is undeniable. We are witnessing a record year for gold investment through ETFs in Australia and around the globe as investors seek safety and stability in these very uncertain economic times.”
Global X ETFs expects gold prices to keep climbing as lower interest rates reduce the opportunity cost of holding gold, potentially making it more attractive compared with yielding assets such as government bonds or cash investments.
“Given the momentum and confluence of tailwinds, we expect gold to head higher still; our year-end gold price target is US$4000 per ounce, which could further ignite gold ETF demand,” Lin said.
“While some investors have been buying gold bars from a broker or a mint, ETFs provide a greater liquidity and simplicity to invest in gold and silver, without having to worry about storage or insurance,” Lin ended.
