Investors get rid of their positions in gold due to falling prices

Investors dumped $5 billion of positions they held in gold-backed ETFs in September as a strong dollar and rising interest rates pushed down the price of gold. raw material.

In terms of volume, outputs in the ninth month of the year were 95 tons of the precious metal, according to a report by the World Gold Council.

September was the fifth month in a row in which there was an outflow of capital from the 90 gold ETFs in the world, in addition to being the largest monthly flight since March 2021.

At the end of the ninth month of the year, the holdings of the investment funds amounted to 3,458 tons of gold or 191,000 million dollars.

Carlos Artigas, head of research at the World Gold Council, explained that ETFs backed by the precious metal buy physical gold, and can be invested in through the stock market.

He commented that despite the pressures faced by the precious metal last month, its price has increased in recent days, which is why there have been capital inflows to ETFs during the first days of October.

In periods of low prices, investors take the opportunity to buy gold (…) Many investors use the drop in price as an entry point to resume their positions in gold,” said Artigas.

Just on September 26, gold hit a two-year low (at $1,628.20 an ounce), after the dollar climbed to a two-decade high following the announcement of the Federal Reserve (Fed) that it will speed up the pace of interest rate increases to contain inflation.

Since that low, the price of gold has recovered 3.55%, trading this Tuesday, October 11, at 1,686.10 dollars per ounce. So far this year, it has fallen 7.84 percent.

“Despite the fall in September, the flows in the ETFs during 2022 are still positive,” assured Carlos Artigas.

The researcher commented that from the perspective of the World Gold Council, there are already signs that the factors that have made gold less attractive as an investment asset are calming down -the strength of the dollar and increases in interest rates-, which will contribute to an increase in the demand for the precious metal.

He added that everything indicates that the uncertainty derived from the war between russia and ukraine will continue in the following months, which will support the rise of both the demand and the price of gold worldwide, since it is a safe haven asset that investors resort to in uncertain environments.

United States leads exits

The World Gold Council detailed that almost all exits from ETFs in September were in funds from the United States and Europe. “Outflows were again widespread, with Asia being the only ‘bright’ spot, where holdings were virtually unchanged month-on-month,” the report says.

Of the funds listed in the United States, 3,156 million dollars or 59 tons came out during the ninth month of the year, making it the country where the greatest investment flight occurred.

UK ETFs suffered outflows of $990 million or 18.5 tons; those of Germany, of 528 million dollars or 9.8 tons; those of Switzerland, of 292 million dollars or 5.4 tons, while those of France left 114 million dollars or 2.1 tons.

In Asia, $7 million or 0.1 tonnes entered gold ETFs in September.

Carlos Artigas said that although Mexico does not have gold ETFstwo instruments of this type can be accessed through the International Quotation System (SIC) of the Mexican Stock Exchange.