How Are the Fund Flows to the GLD ETF?



Gold inflows and outflows

The rise and fall in precious metals have been dependent on the Federal Reserve scene over the past one-month period. The 0.25% hike in interest rates offered on Treasuries was one of the major determinants behind the fall in gold and silver. 

The drop in precious metals can also lead to a slump in money flowing to funds such as the SPDR Gold Shares ETF (GLD), the iShares Gold Trust ETF (IAU), and the iShares Silver Trust ETF (SLV).

The chart below shows us money flowing in and out of the largest gold-based fund in the world—the SPDR Gold Shares ETF (GLD). GLD was trading close to $118 on June 19 and has seen a year-to-date gain of almost 8%. The volume in the fund has also been dropping over the past few weeks.

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Asian demands

There has also been a considerable fall in demand from Asian markets, including India and China, over the past year and through 2017. However, traders in India have started stocking up gold in anticipation of a higher goods and services tax (or GST). This pushed up the imports of the precious metal and widened the country’s trade deficit to a 30-month high in May 2017. 

Gold is one of the major contributors to India’s import costs, and India ranks among the top consumers of gold after China.

There is a chance that rising Asian demand may boost the precious metal. The physical market demand has had minimal impact on the ETF’s funds flow. However, rising prices can result in inflows for gold.

Mining shares that may also closely follow the path of precious metals include Eldorado Gold (EGO), Royal Gold (RGLD), B2Gold (BTG), and IamGold (IAG).


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