Gold prices have been experiencing sustained volatility recently. Amidst the uncertainty in the market, the overall scale of gold ETFs has shrunk, with significant net outflows observed in some products. As of June 3rd, 14 gold ETFs have seen net outflows exceeding 10 billion yuan over the past month.
The previously widely accepted view among investors of "buying the dip when gold prices fall" is beginning to show divergence under the current volatile market conditions. Does gold still hold allocation value at present? According to industry professionals interviewed, the pattern of short-term gold price fluctuations is likely to persist, but from a medium to long-term perspective, the core logic supporting gold's allocation value remains unchanged.
Gold Price Volatility and Fund Outflows
Gold ETFs are open-end funds that invest the majority of their assets in gold products listed on the Shanghai Gold Exchange. They closely track the price of gold, allow for subscription and redemption using a portfolio of gold products or methods specified in the fund contract, and are traded on stock exchanges.
Currently, there are primarily two categories of gold ETF products in China. One category tracks the price of the Shanghai Gold Exchange's Au99.99 spot physical contract, comprising 7 products with a total scale of 256.338 billion yuan. The other category tracks the price of the Shanghai Gold Exchange's Shanghai Gold Centralized Pricing contract, also consisting of 7 products with a combined scale of 31.903 billion yuan.
Overall, among these 14 gold ETF products, Huaan Gold ETF has the largest scale, exceeding 100 billion yuan. The scales of Bosera Gold ETF, E Fund Gold ETF, Guotai Gold ETF, and ChinaAMC Gold ETF are all above 10 billion yuan, at 46.873 billion yuan, 39.609 billion yuan, 38.096 billion yuan, and 17.048 billion yuan, respectively.
Data from Wind shows that as of June 3rd, the aforementioned 14 gold ETFs had net outflows of 10.003 billion yuan over the past month. Among them, Huaan Gold ETF experienced the largest net outflow of 6.25 billion yuan.
Beyond gold ETFs, investors utilizing gold equity ETFs and various gold stock-themed funds to position in the gold sector have also seen their net asset values affected by gold price volatility, experiencing varying degrees of drawdown.
A fund manager noted: "Gold ETFs primarily track the spot price of gold, while gold stock-themed funds invest in individual gold stocks, with their net value fluctuations following stock price movements. In the long run, the return rate of gold stock-themed funds tends to be higher than that of gold ETFs because gold stocks benefit not only from rising gold prices but also from the sustained growth in each company's gold production, representing a dual-driver of both volume and price increases. However, it is important to note that the short-term volatility of gold stock-themed funds can also be greater than that of gold ETFs. Therefore, investors can decide on the specific allocation ratios of different funds based on their own return targets and risk tolerance."
Short-Term Pressure, Long-Term Optimism
Influenced by the repeated fluctuations in gold prices, the allocation value of gold continues to attract market attention, and the decision of whether to hold or exit has become a dilemma for many investors.
A representative from Guotai Asset Management stated: "In the short term, gold may maintain a volatile trend. Current geopolitical factors could still bring risks of gold price fluctuations. Relevant data shows that both long and short positions in gold are declining simultaneously, indicating an overall wait-and-see attitude among funds."
"From a medium to long-term perspective, the allocation value of gold remains solid," the representative added. The diversification of global asset reserves continues to increase the demand for gold as a safe-haven asset. The global trend of "de-dollarization" also positions gold to potentially become a new pricing anchor. Global central banks' gold purchases are ongoing, and investor demand to buy gold on dips remains strong, suggesting that buying pressure is still relatively solid. Investors need to make investments based on their own investment horizon and risk preferences, potentially seizing opportunities to build positions during price dips to capture the medium to long-term allocation value of gold.
An analyst from Bank of China Investment Management shared a similar view: "In the short term, gold prices are highly likely to maintain a range-bound fluctuation pattern. The market disturbances caused by short-term interest rates and geopolitics have not undermined the medium to long-term allocation logic for gold. As a cross-cycle safe-haven asset, gold's value in diversifying volatility and hedging tail risks within a major asset portfolio remains firmly established."
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