In contrast to the first three quarters of 2020, which saw a cumulative 1,007 tonnes added to the global AUM, the fourth quarter (Q4) had net outflows of 130 tonnes. In terms of geography, during Q4, funds listed in North America and Europe recorded outflows of 86 tonnes (– $5.0 billion) and 35 tonnes (– $2.3 billion) respectively, which accounted for the bulk of the outflows. Funds in Asia lost 4.7 tonnes (– $255 million), while outflows from funds listed in other regions was recorded at 4.4 tonnes (– $257 million).

Particularly during December, where 40 tonnes (– $2.2 billion) of outflows were recorded, the outflows slowed considerably with North American (-1.2%) and European (-0.8%) funds witnessing respective declines of 1.2% and 0.8%, while Asian funds experienced the largest decline relative to their size at 1.7%.

The lure for gold was seen in India as well, where gold ETFs attracted net inflows of nearly ₹431 crore, reversing November’s net outflows of ₹141 crore, as investors looked to take advantage of rising gold prices. According to CRISIL Research, gold ETFs in India surpassed over ₹6,600 crore during 2020, and their AUM touched ₹14,000 crore.

According to Ravindra Rao, vice president and head of commodity research at Kotak Securities, gold had been on a rise for the last few years, and the rally increased in 2020 owing to Covid-19 pandemic. At the end of 2020, Rao said that the then recent sell-off had been mainly due to profit taking amid hopes of a Covid -19 vaccine and year-end position squaring. “Although it has slightly dented market sentiment overall outlook for gold is still upbeat,” Rao says.

Also, in Rao’s view, while the Covid-19 situation is proving to be a challenge for the global economic recovery, the lower interest rates prevailing worldwide and U.S. dollar's downtrend might prove positive for the yellow metal. “A sustained break might be seen in 2021 which might push the prices to $1980 per ounce and then $2050,” Rao adds.

And WGC is also bullish on gold demand in 2021. “In 2021, many of the same drivers of gold demand should continue, such as lower rates and improved opportunity costs, fiscal stimulus, lofty stock valuations, and the economic effects of Covid-19,” WGC pointed out. As far as gold prices and AUMs of gold ETF are concerned, the volatility fuelled by uncertainties while ensure that gold does not lose its sheen during 2021, though the year may not see a repeat of 2020.

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Gold ruled 2020. Will it reign 2021 too?