The rise in precious metals is not only backed by the haven demand, but also the overall bullish sentiment in gold. The inflows to the SPDR Gold Shares (GLD) have picked up substantially in 2016. The inflows in the current year have already surpassed the outflows seen in 2015. The shaky prices during the previous year due to the looming fear of rising interest rates continued hovering over gold, and investors withdrew funds from gold-based assets. The loss in GLD and the iShares Gold Trust (IAU) was due to the ~10% decline in gold.
However, the fear-stricken investors in the current year were left with no other option but to park their money in safe-haven assets like gold. With a surge of 17.4% in gold itself, GLD and IAU have gained 17.0% and 17.2%, respectively.
Hedge funds and money managers are also bullish about gold. However, the physical demand in the gold metal consumer giants, India and China, remains subdued. The weakness of the overall economy and concern over further monetary easing have gripped investors.
The fund flows to gold have not only helped lift the metal itself, but also the mining sector. Companies like Yamana Gold (AUY), Hecla Mining (HL), and Agnico-Eagle Mines (AEM) have gained a whopping 55.2%, 34.9%, and 17.1%, respectively. These three companies together make up 10.4% of the VanEck Vectors Gold Miners ETF (GDX).