Gold did not come out with a rate – Newspaper Kommersant No. 230 (7431) of 12/12/2022

In November, management companies (MCs) recorded the first sales of gold mutual funds after the outbreak of hostilities in Ukraine. Last month, the net outflow from such funds amounted to almost 165 million rubles, which is 100 million less than the inflow a month earlier. Shareholders are reducing such investments, because they have not brought income since the beginning of the year, and also because of the appearance on the market of a more profitable foreign exchange alternative – replacement bonds. However, against the backdrop of a weak ruble, interest in funds may recover.

Russian investors have lost interest in investing in “paper gold”. According to Kommersant’s estimate, based on Investfunds data, in November, private investors withdrew 164.5 million rubles from mutual funds (PIFs) focused on investing in gold, which is 100 million rubles. less than the inflow a month earlier. This is the first negative result since February and the maximum outflow this year.

After the outbreak of hostilities in Ukraine on February 24, private investors actively bought up gold bars, investment coins, metal-oriented mutual funds, and also opened depersonalized metal accounts. In total, for the period from April to October, the net inflow of funds to such funds exceeded 6.5 billion rubles. These investments were seen as an alternative to dollars, the toxicity of which has risen sharply against the backdrop of sanctions.

However, in recent months, interest in gold investments has been declining. If in the summer months the influx of investments in gold funds amounted to 1.4-2 billion rubles. per month, then in September the figure fell to 580 million rubles, and in October it barely reached 260 million rubles: since the beginning of the year, the ruble price of the metal has fallen by more than 17%, to 3.5 thousand rubles. per gram. As a result, gold funds have depreciated the investments of shareholders by 18-20%, according to Investfunds data.

The decrease in interest in gold funds was facilitated by the appearance on the market of more profitable promising ideas with a more interesting risk-return ratio, namely, replacement bonds, Eurobonds in NSD, said Dmitry Skryabin, portfolio manager at Alfa Capital.

According to Kommersant’s estimate, based on data from Renaissance Capital and Cbonds, from August to the end of November, seven issuers made 17 placements of replacement bonds totaling more than $5 billion. The yield on such securities is 5–8% per annum. “Investing in gold through the purchase of shares of investment funds is a more liquid instrument and therefore provides more opportunities for active investment management than the purchase of bullion,” notes Alexandra Falkova, portfolio manager at Pervaya Management Company.

Due to high foreign exchange rates in the debt markets, investors around the world are actively reducing investments in gold ETFs. According to Bloomberg, last week the assets of such funds decreased by 12.7 tons, to 2.9 thousand tons, which is close to the minimum since April 2020. Since the beginning of the month, the assets of the funds have decreased by 14.5 tons, and over seven months of almost continuous decline by more than 400 tons.

The sale of the metal comes against the backdrop of a rising US Federal Reserve rate, which increased by 3.75 percentage points (pp) since the beginning of the year, to 3.75-4%, which led to an increase in the yield of medium-term Treasury bonds by 3.1-3 .6 p.p., up to 4–4.3%. With such yields of risk-free US Treasuries, investors are not interested in gold, which does not bring any coupon income. Even the growth in the cost of the metal over the past month by more than 10% and the return of its price to the level of $1,800 per ounce cannot reverse the trend, as the market continues to expect a further increase in the Fed rate to at least 5%.

At the same time, market participants doubt that Russian investors will reduce their investment in gold as massively and continuously as international investors do, as their behavior is also influenced by internal factors. “The problems in the stock market have not yet been resolved, and gold, of course, could act as a protective tool. Interest in gold still remains, gold is important from the point of view of portfolio diversification,” says Evgeny Gorbunov, Head of Products, Marketing and Technology at Otkritie Management Company.

According to Dmitry Skryabin, a lot will depend on the further dynamics of the ruble exchange rate, with a weakening of which the need for currency exposure will increase, and the ruble price of the metal will also grow. In early December, against the backdrop of the growth of the dollar in Russia by 2.4%, to 62.43 rubles / $, gold mutual funds have already attracted about 10 million rubles.

Vitaly Gaidaev