Investors in gold-backed exchange-traded funds (ETFs) have totaled to a record 1,039.68 tonnes of bullion, becoming the largest holders of gold after the reserves of the US, Germany, the International Monetary Fund, Italy, France and Switzerland, said a report by Insignia Consultants. The purchases partly reflect concerns over the health of US financial institutions and safe-haven buying spurred by a weakening dollar.
"Investment demand in Gold ETF can change anytime with change in investors preference. Investment demand in gold ETF will fall as and when the sentiment in equities change from negative to positive. Further there has been an inverse correlation between gold ETF demand and physical demand," said Chintan Karnani, Owner of Insignia Consultants.
Investors’ bullion assets have risen by 31% in the past 12 months and have almost doubled since September 2006, according to statistics compiled by the industry-backed World Gold Council.
The world’s largest bullion-backed ETF, the New York-listed SPDR Gold Trust, saw a 30.2 tonnes inflow on Monday, bringing its holdings to an all-time high of 709.2 tonnes.