The Strategist

International investors are turning away from gold

08/21/2023 - 03:49

The assets of gold exchange-traded funds have increased by at least 2.8 thousand tons since March 2020.

Due to growing anticipation of further hikes in the Federal Reserve System's benchmark rate, interest in metals is dropping as US Treasury bond yields rise to multi-year highs. As a result, the price of gold decreased to a five-month low and stabilized around $1900 for a troy ounce.

The assets of exchange-traded funds (ETFs) investing in gold reportedly reached 2.8 thousand tons at the end of last week, updating the minimum level since March 30, 2020, according to Bloomberg news. 

Over the course of 12 weeks, assets have continuously decreased by more than 120 tons, with the loss of approximately 30 tons of gold occurring just since the start of August.

The most recent data from Emerging Portfolio Fund Research (EPFR) also show that foreign investors are not particularly interested in gold. The total amount of money taken out of gold funds for the week ending August 16 was $400 million, according to Bank of America (using EPFR data). Overall investments in gold funds have been declining for the 16th week in a row, and only since the start of August have net sales reached approximately $2.5 billion.