Gold ETF buying continues to accelerate

When gold prices plunged in 2013, the key reason would be a mass liquidation from the gold being locked in exchange-traded funds, which shed an astounding 880 tonnes of the metal.

ETF buying was very limited in 2014 and 2015 as investors had minimal interest in the gold sector. But it originates back in a large way to date in 2016, with ETF gold holdings rising by a lot more than 270 tonnes. That works to about nine per cent of annual gold mine production.

The rebound in ETF demand has very positive implications for that sector, according to analysts at TD Securities.

“This strong investor and physical interest in gold is a key driver in sustaining this rally (in gold prices), and an indication that investor demand from customers has turned positive for gold,” i was told that in a note.

The analysts noted this is the first “sustained” duration of inflows into gold ETFs given that they peaked at the end of 2012. Plus they noticed that gold demand outside the ETF has been quite strong as well.

“Physical demand has been strong to begin the entire year in India and China, and interest in gold eagle coins within the U.S. was up 209 per cent within the first two months year-over-year,” they said, citing Metals Focus.