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Factors Affecting Gold ETFs:


Gold Exchange Traded Funds (ETFs) are popular among investors as transactions are very much easy.But their certain factors which we should keep in mind while investing in Gold ETFs.

We will categorize them as Fundamental factors & Technical factors.

Fundamental Factors Affecting Gold ETFs:

The fundamental attrributes which affects prices of Gold have direct impacts on Gold ETFs as well .Some important fundamental factors which can influence Gold prices are as follows:

  1. Global Demand & Supply:Demand / Supply of Gold which is influenced by factors like forward selling by Gold producers,Central Bank purchases,Sales , Production,Cost levels in major Gold producing countries like South Africa,United States,Australia.
  2. Currency Exchange Rates:Today Dollar : Rupee currency exchange rate is 54.30.If suppose this rate go down @50 then Gold will available in cheaper rate & vice versa if currency exchange rate goes above to 58. …..Also View: How Gold & Silver Prices are calculated In India.
  3. Inflation rates & investors expectations in future.
  4. Interest Rates.
  5. Trading activities by big hedge funds & commodity funds.
  6. Global regional,political,economical,Financial events & crisis.

Also Read: Factors Affecting Commodity Prices.

Technical Factors Affecting Gold ETFs:

  1. The Gold underlying the Gold ETfs may be subject to loss,theft,damage though enough precautions are always taken by the issuers.
  2. The best prices quoted in the market are for small transactions only.Big transactions may have to be executed ┬áless prices…this additional cost risk which is known as “Impact Cost Risk” can affect the Gold ETfs.
  3. Liquidity Risk:Absence of adequate liquidity of Gold ETFs may impact the transactions in Gold ETFs.
  4. Taxation:Changes in taxation structure like changes in import duties,sales tax,VAT,can affect the gold valuation & will directly affect the Gold ETF prices.

Also Read:


Category: Commodities

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Information provided on this blog is for general purpose only & not investment advice.Please take advice of SEBI Registered Investment Advisors before taking any investment decision.
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