Record in gold-based mutual funds

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Record in gold-based mutual funds
The World Gold Council (WGC) announced that a record break in the amount of money flows in gold-based mutual funds in January-May this year.

According to the report compiled by the WGC related developments in May, gold-based investment funds added 154 tons of gold worth $ 8.5 billion last month, and the amount of gold in these funds reached a new record level of 3 thousand 510 tons.

Gold-based investment funds posted $ 33.7 billion in their portfolios in January-May period of this year. Thus, the flow of money to gold-based investment funds over the 5-month period broke a record in terms of quantity.

Record in gold-based mutual funds 1

With the rising gold prices, the value of gold, which is under the management of gold-based investment funds, reached its historical peak with $ 195 billion. In the portfolios of the said funds, an increase was recorded every day except for two trading days in April and May, while a similar trend has been experienced except for four trading days in May and June.

The ounce price of gold rose to its highest level in the last 8 years with $ 1,765, but it partially returned its earnings and closed the mine at $ 1,728, rising by 2.6 percent on a monthly basis.

Uncertainties continue to support gold price

Although there was a significant increase in the relatively risky asset prices last month, the possible economic and social effects of the new type of coronavirus (Kovid-19) outbreak supported the ounce price of gold.

The fact that the central banks followed expansionary policies, including the classes of assets that were unthinkable until a few months ago, that is, even buying low-credibility bonds, suppressed the bond returns. Thus, while the opportunity cost of gold decreased to even lower levels, it increased the uncertainties in the markets.

Investors turned to gold to hedge themselves against rising budget deficits and overvaluation of stocks, while the amount of gold in gold-based funds outperformed official gold reserves of all countries, except the US.

Central banks will again play an important role in gold prices

Volatility in the price of ounces of gold has been relatively low compared to previous periods, but still remains at high levels. Investors expect gold prices to follow a more stable chart in the coming period.

Maintaining the expansionary stance of the central banks remains one of the important factors expected to support gold prices in the coming period.

Economic and social uncertainties regarding the Kovid-19 outbreak and the second possible Kovid-19 wave are among the factors expected to support gold prices upward by investors.

While the confusion in the USA also increases the perception of risk in the markets, it is predicted that investors’ safe haven searches may support the gold prices upward if the demonstrations continue.

North American funds continue to invest in gold

On the basis of regions, North America was at the forefront of the money flow in gold-based investment funds, while the price performance of gold was effective. While the portfolios of the regional funds have been growing for two consecutive months, these funds received 102 tons of gold worth of 5.6 billion in May.

Thus, the total amount of assets in North American gold funds reached 1,815 tons, exceeding the highest level of 1,736 tons recorded in December 2012.

Last month, 45-ton worth of assets worth $ 2.5 billion in gold-based investment funds in Europe, 65 percent of which was backed by UK funds.

In the said period, Asian funds received 4.4 tonnes worth $ 262 million, and 2.6 tonnes worth $ 2.6 million worth of funds from other regions.


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