With gold regaining some of its lost sheen on the back of improved global demand, redemptions in Gold ETFs, which track price trends of physical gold, have eased off with net outflow in July falling to almost half compared to the outflows seen in June. The net outflow at the end of July stood at R107 crore, while in June net outflows amounted R206 crore, shows data from the Association of Mutual Fund Industry (Amfi) and Value Research.
Year-to-date net outflows add up to R358 crore,with a bulk of this being seen in June and July. Gold prices corrected by 15% between January-June before rebounding. Prices have surged nearly 20% since July.
Outflows from Gold ETFs have stabilised as prices of the underlying assets have benefited from domestic as well as global factors. In spite of finance ministry?s efforts to curb imports, India has bought 566 tonnes in first half of CY13, which is 50% higher than the year-ago period. The prices are likely to touch R32,200 ? 32,400-level if the resistance of R31,300 is breached,? said Sugandha Sachdeva, AVP, in-charge, metals and energy research, Religare Securities.
On Wednesday, gold was trading at R31,638 per 10 grams on MCX at 5.22 PM IST.
As a result of the rebound in prices, Gold ETFs? assets under management (AUM) saw the highest monthly gain in nearly two years, with AUMs rising to R10,700 crore at the end of July 2013.
According to data from Value Research, Gold ETFs have given average returns of more than 14% in the last one month. In the three-month period, the average returns have been even higher at 20.13%, reflecting the sharp rise in the prices during this period.
However, for investors who have been invested in the product for one-year, the returns are still marginal at 1.71%. Market observers feel that it is still too early to gauge investor?s mood towards the product. ?Rise in the prices has stirred some interest, but a lot would also depend on how the US Federal Reserve?s winds down its stimulus package in the US,? said Kaushik Dani, head (equity), Peerless AMC.
