Recent decreases in gold pricing have increased investor appetites for tokenised gold ETFs, indicates research from ST0x.
A survey comprising 200 professional investors based in Europe, North America, the Middle East, and Asia reveals that just over three-quarters believe the recent price drop presents a buying opportunity. This group is divided between 28%, who consider the price drop a “strong” opportunity, and a further 48%, who label it “moderate”.
Of these groups, 31% plan to increase their holdings by between 3% and 4%, while 23% will raise gold allocations by 2% to 3%.
An additional fifth have a neutral stance, maintaining their current assets but waiting for clear signs that the price has reached a “technical price bottom” before buying more – leaving just 4% who believe gold assets will continue declining for the foreseeable future.
See also: Why gold remains a core asset despite a ‘perfect storm’
Some 53% of respondents expect gold prices to undergo a moderate recovery toward the 200-day moving average by December, predicting a price of between $4,201-$4,600 per troy ounce, while 28% forecast consolidation at current levels. By contrast, only 2% foresee a steep continuation of the current decline to a price below $3,800.
Nick Magliocchetti, director, S01 Issuer GmbH, summarised investor perceptions: “Gold’s recent price decrease is being viewed by professional investors as an opportunity to reassess and increase exposure, rather than a fundamental breakdown in the precious metal’s investment case.”
This ongoing investor reassessment has caused increased interest in tokenised gold ETFs. Of those respondents intending to increase their gold assets over the next six months, some 23% have said they will use tokenised ETFs exclusively, with an additional 58% considering their use alongside traditional ETFs.
Investors cite two advantages in their decision to deploy capital through tokenised ETFs, including 24/7 trading and near-instant settlement – both particularly useful for capitalising on the gold price decrease.
Magliocchetti said: “What is particularly interesting is the willingness of investors to consider tokenised securities referencing gold ETFs as a tactical vehicle for putting that capital to work. The combination of 24/7 access, near-instant settlement and the ability to deploy capital quickly could be particularly valuable when markets move sharply.
“While traditional ETFs will remain an important part of portfolios, tokenised securities referencing gold ETFs have the potential to give investors greater flexibility and precision when responding to short-term market opportunities.”
