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WGC: Gold-Backed ETF Holdings Across the Globe Slide 2%

The monthly analysis report published by the World Gold Council (WGC) suggests that gold-backed Exchange Traded Funds (ETFs) across the globe dropped by 2% in April. The total holdings declined by 57 tonnes (t) to total 2,424t at the end of the month.

The outflows were led by North America, which accounted for 46t of outflows. Most liquid gold-backed ETFs witnessed losses. For the first time, low-cost gold-backed ETFs recorded net outflows. The negative trend was mainly on account of strong U.S. stock markets, which continued to touch new highs. The rise in dollar strength too contributed to the decline in gold ETF holding.

Europe reported outflow of 8t, mainly from the UK. It must be noted that the holdings had reached new high in February this year. The ongoing shift in assets by Chinese investors from gold to stock markets reduced ETF gold holdings in Asian region as well. The funds listed in Asia registered a fall of 2.5t. Also, other regions witnessed gold ETF outflows of 0.4t.

According to WGC, gold trading volumes declined during the month of April to $106 million per day, which is significantly lower by 7% from the 2018 average trade volume. The outflows are a clear indication of the bearish gold market sentiment and drop in liquidity.

Although investor sentiment on global economic outlook has improved, potential risks still exist. The political uncertainty in Europe, stretched global stock market valuations and ongoing U.S.-China trade war are likely to lead to market volatility.

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