Gold ETP assets rise as equity ETFs plummet

European-domiciled gold ETPs pulled in €114m in the week ending 25 February as equity indices across the region fell, according to Deutsche Bank.

ETCs attracted a total of €396m, as oil, agriculture and broad-basket vehicles continued their strong performance in 2011. By contrast, equity ETFs lost €142m and fixed income products continued their losing streak, registering mild outflows of €34m.

Deteriorating investor sentiment on gold made headlines in the first couple of months of this year as confident investors redirected their money towards developed market equity funds. Gold ETPs lost €614m in cash and saw assets under management (AUM) shrink by €1.8bn up to 11 February.

A fall of 3.3% on the DAX and 2.7% on the EuroStoxx 50 in the week ending 25 February, however, contributed towards losses of €4bn of assets across equity ETPs -by far the largest of any week so far this year. In the meantime, it appears investors are making their way back to the traditional safe haven of precious metals.

Burgeoning cash flows and rising prices grew AUM in gold ETPs €292m over the week. Moreover, as the mood on European equities turns sour, it is not only gold benefiting. Despite platinum and palladium prices falling, Deutsche Bank's figures show that no precious metal segments saw outflows in the week up to 25 February.

A resurgent precious metals market seems likely to be a persistent theme. ETF Securities reported flows of $67m into its physically-backed gold ETPs last week, and says inflows across its precious metal ETCs have now hit 13-week highs. The company's silver platform saw its highest weekly creations for 19 months last week, totalling $49m.

ETFS credits the recovery of the precious metals market to escalating geopolitical tensions alongside sovereign risks and says that inflationary threats are likely to continue.