ETF Outlook Perks Up in Commodities as Gold Funds Defy Exit
- Broad-basket funds on pace for record withdrawals this year
- Goldman among banks that are bullish on raw materials for 2020
Gold has been one of the few bright spots in commodity ETFs this year, with investors pouring in the most money since 2016 as funds linked to most other raw materials saw withdrawals. But the outlook across the sector in 2020 may be brighter.
About $18 billion flowed into long-only gold-backed exchange-traded funds as of Friday, with a decline in U.S. borrowing costs boosting the appeal of non-interest-bearing assets such as precious metals. That more than offset an exodus in energy, base metals, broad-based and agriculture ETFs that came as the U.S.-China trade war and a slump in global manufacturing fueled demand concerns.
With the U.S. and China agreeing to a partial trade deal and tentative signs that factory output is on the mend, speculators may be set to give the ETFs another look. Goldman Sachs Group Inc. said declining inventories and a dearth of investment needed to expand output will help spur a rebound in spot prices. Bank of America Corp. sees manufacturers restocking finished goods, adding to demand and helping boost returns for commodities.