Page 41 - Bullion World Volume 02 Issue 10 October 2022

Bullion World | Volume 2 | Issue 10 | October 2022
NEWS BIS: Gold Jewellery

Hallmarking

Gold ETFs see continuous outflows due Recorded Notable
to lower returns, volatility Surge
...............................................
The Bureau of Indian Standards
Gold ETFs witnessed net outflows in August. The category saw outflows (BIS) announced that the mandatory
worth Rs 38.14 crore, while other ETF’s witnessed inflows of Rs 7416.46 hallmarking requirement which
crores. According to data from Association of Mutual Funds in India, there came into force in mid-June this
has also been a reduction in the number of folios with Gold ETF funds. The year has witnessed huge success.
folios have gone down from 46,42,602 in July to 46,09,726 in August, 2022.
There has been a notable surge in
the volume of hallmarked jewellery
Gold prices have fallen up to 10% in the last six months and around 20% items, it said.
from its historical peak in the pandemic. The gold funds category has offered
an average return of -2.20% in one month and -0.76% in three months. Around 3.7 crore jewellery articles
Analysts believe that the ETFs are facing the brunt of volatility in gold prices. were hallmarked during the initial
The expectation of a global slowdown, higher inflation and interest rate hikes quarter (April-June ’22) of the
are influencing uncertainties in gold prices globally. Mutual fund managers current fiscal year. Also, nearly
say that the trend of outflows from gold ETFs is not just a domestic 8.68 crore jewellery articles were
phenomenon, but a global one.
hallmarked in the previous fiscal
year ended 30th March, 2022. The
“Gold prices have remained volatile over the past and hence ETFs have statement further noted that the
been witnessing outflows for the second month in a row. While investors number of BIS registered jewelers
draw some comfort around expectations of the inflation peaking, there have surged higher significantly from
is a continued uncertainty as macro indicators signal towards a global 43,153 in July last year to as many
slowdown. As interest rates continue to rise, impacting gold prices, investors as 1.43 lakhs in August this year.
prefer to park their money in other assets like equity and short-term debt Over the same period, the count
instruments as opposed to gold,” says Kavitha Krishnan, Senior Analyst – of BIS-recognized Assaying and
Manager Research, Morningstar India.
Hallmarking Centres have increased
Gold ETFs inflows month on month: from 948 to 1,201.
Month Net inflow/outflow No. of folios
The first phase of mandatory
August -38.14 46,09,726
hallmarking had covered 14 carat,
July -456.75 46,42,602
18 carat and 22 carat gold jewellery
June 134.83 46,05,088 articles. The second phase covered
May 203.39 45,06,327 additional cartages-20carat,
April 1,100.37 43,62,502 23 carat and 24 carat. Also, it
covered more number of districts.
“The outflows from gold ETFs is typical investor behaviour where tactical Several more districts would be
investors tend to move out of gold when equity markets do well, which has covered under the mandatory gold
been the case over the last 2 months. In contrast, gold ETFs saw strong hallmarking order in future.
inflows in the preceding months during the equity market volatility. Going
forward, if volatility returns to equity markets, which is likely given the The mandatory hallmarking
aggressive tightening by global central banks led by the federal reserve, ensures purity of gold purchased by
gold and gold ETFs could again see renewed interest,” says Gazal Jain, customers. It also offers them higher
Associate Fund Manager- alternative investments, Quantum Mutual Fund. resale or exchange value for gold
jewellery and artefacts.
Fund managers and advisors say that investors should view gold as a
strategic portfolio asset instead of chasing it every time the ride gets tough Source: https://
in the equity markets. “Considering that gold ETF’s are used as a means www.scrapmonster.com
to diversify an investor’s portfolio and are used as a hedge against market
risks, it’s important to remember that this asset class only forms around
5-10% of an investor’s portfolio, no matter how attractive the valuations
get,” says Kavitha Krishnan.

Source: https://economictimes.indiatimes.com

41