Last week the World Gold Council reported that central banks continued to add to their global gold reserves during the month of July. The World Gold Council also highlighted that China, Poland and Turkey were among the countries that were the largest buyers of gold during the month.
Why Are Central Banks Interested in Gold?
Central banks often turn to gold because it generally maintains its value regardless of currency or geopolitical developments. This could be a contributing factor as to why data continues to show that many of the central banks are keen on upping their global gold reserves.
Investors also have taken an interest in gold this year. Using data obtained from the Explorer platform we are able to see how much investors are engaging with gold ETFs on VettaFi’s digital properties. The data shows that investors have shown the most interest in gold relative to other precious metals in the past six months. Gold ETFs account for more than 60% of all interactions on VettaFi digital properties when it comes to precious metals.
Diving even deeper into the data, investors are specifically interested in physical gold ETFs rather than other types of gold exposures. This could be because physical gold ETFs lack the equity risk that gold mining ETFs on the market can face. Indeed, market volatility is elevated this year, which could account for the uptick in interest. Physical gold ETFs also provide more direct exposure to the underlying asset than futures-based products.