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20-month high for gold ETF inflows

Investors returned to a popular gold-tracking exchange traded fund in November, as prices of the yellow metal hit a record high on growing hopes that the Federal Reserve will ease monetary policy in 2024.

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The $57.8 billion SPDR Gold Shares ETF saw net inflows of more than $1 billion in November as gold prices rallied on expectations that the Federal Reserve could start cutting interest rates as early as March.

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This was the strongest month of inflows for the SPDR Gold Fund since March 2022, snapping a five-month streak of outflows.

The fund ended November up 2.5%, but was down 2.2% on Monday.

Meanwhile, spot gold hit a new record high earlier in the day, before falling more than 2% as the US dollar rebounded.

“Most people are pretty bullish on gold,” said Aniket Ullal, head of ETF data and analysis at CFRA.

The rise follows a drop in US Treasury yields from 16-year highs in October, as signs of cooling inflation fuel bets that the Fed will ease monetary policy. Falling yields tend to boost the appeal of gold, a non-yielding asset.

At the same time, the US dollar has fallen 3.5% from its year high in early October. A weaker dollar can help boost commodities priced in the US currency, which become more affordable to foreign buyers as the greenback falls.

“If the dollar strength moderates, that would help gold,” Ullal said.

The SPDR fund is up nearly 11% so far this year, underperforming the nearly 20% gain in the benchmark US S&P 500 index.

Among some other gold-tracking ETFs, the $26 billion iShares Gold Trust had net outflows of $388.5 million in November, while the $6.2 billion SPDR Gold MiniShares Trust had net inflows of $23.6 million for the month.

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Alice
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