Investments in Gold ETFs Reach All-Time High
Global investors have set a historic record for investments in gold exchange-traded funds (ETFs) — in the week ending October 22, net inflows totaled $8.7 billion, Kommersant reports, citing data from Emerging Portfolio Fund Research. This figure nearly doubled the previous week’s result. Since the beginning of autumn, total investments in such funds have reached $39 billion.
The surge in demand for gold is linked to large-scale monetary easing by central banks. Over the past 12 months, global regulators have cut interest rates 313 times — the fastest rate-cutting cycle since 2010, according to Bank of America. The Bank of Canada lowered its rate by 175 basis points, the European Central Bank by 150 basis points, and the Bank of England by 100 basis points. In September, the U.S. Federal Reserve resumed its rate-cutting cycle after an 11-month pause, reducing rates by 25 basis points to 4.25%.
Falling interest rates reduce the opportunity cost of holding gold compared to other assets. Since the beginning of the year, the precious metal has risen in price by more than 50%, outperforming all traditional investment instruments. On Friday, spot gold prices reached $4,112 per ounce, down nearly 6% from the all-time high of $4,379.4 recorded on Monday.
Market participants view the recent decline as a healthy correction following a prolonged rally. Analysts at Bank of America predict that gold prices could rise to $5,000 per ounce next year, provided the Federal Reserve continues to cut rates and geopolitical risks remain elevated.
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