Gold ETFs shine as investors flee equity turbulence

NEW YORK • As US stocks approach a bear market, investors are seeking shelter in gold exchange-traded funds (ETFs) typically seen as a safety play in times of uncertainty.

The US$32.4 billion (S$44.3 billion) SPDR Gold Shares fund saw inflows of more than US$643 million one day this week, the most since July 2016. The fund has received cash infusions for three straight sessions, totalling US$846 million.

Inflows into gold ETFs come on the back of an extended downturn in the S&P 500 index, which has slid 17 per cent this quarter as investors worry about trade negotiations and a United States government shutdown.

One of the rare bright spots in markets these days is gold, with the precious metal up more than 7 per cent this quarter and set for its biggest monthly gain in almost two years.

"In times of strife or fear or volatility in the markets, people tend to buy gold as a safe haven," said Mr Sean O'Hara, president at Pacer ETFs Distributors.

Mr Dave Campbell, a principal at BOS Invest, a San Francisco-based wealth management firm, said: "There doesn't seem to be any fiscal restraint in Washington these days.

"That means we are borrowing money or will be printing, but it's a tough road and that could weigh on our currency. Gold could actually hold up its value over time better."

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A version of this article appeared in the print edition of The Straits Times on December 29, 2018, with the headline 'Gold ETFs shine as investors flee equity turbulence'. Print Edition | Subscribe