The scale of gold ETFs has surged to 116 billion. Can they still be bought under the temporary suspension of "reciprocal tariffs"?

With the adjustment of US tariff policies, global financial markets have seen a surge in risk-averse sentiment. Gold ETFs have experienced strong capital inflows this year, with the market size increasing by 64.72% year-to-date. Under the US's temporary suspension of "reciprocal tariffs" today, gold ETFs once again showed a collective trend of opening higher with a gap and rising. Several gold-themed funds have recently continuously warned of high premium risks.

Industry insiders believe that the short-term correction of gold ETFs was mainly due to liquidity factors. In the medium and long term, the demand for gold as an anti-stagflation asset has surged, and allocating gold funds can still effectively diversify risks and optimize investment returns.

The repeated changes in US tariff policies have not stopped the explosive growth of gold ETF sizes, which have now increased to 116 billion.

Data shows that as of April 9, the total size of 14 gold ETFs in the market was 116.029 billion yuan, an increase of about 64.72% from 70.442 billion yuan at the end of last year.

Currently, there are 4 gold ETFs with sizes exceeding 10 billion yuan, belonging to Huaan Fund, Bosera Fund, E Fund, and Guotai Fund, with current sizes of 46.943 billion yuan, 22.371 billion yuan, 19.757 billion yuan, and 13.849 billion yuan, respectively. The size increases this year have been 63.70%, 49.10%, 49.13%, and 93.91%.

Notably, the continuous rise in gold prices has also been accompanied by net value drawdowns due to some products "cashing in." Data shows that the Nanhua Gold Index rose by 8.33% in March, but some gold ETFs started to see net outflows from the beginning of March. For example, on March 21, E Fund Gold ETF, Bosera Gold ETF, and ChinaAMC Gold ETF all experienced net value declines.

Since April, US tariff policies have been fluctuating. Under the news of the temporary suspension of reciprocal tariffs today, the Nanhua Gold Index has rebounded, but it has still fallen by 0.23% since April. However, the growth momentum of gold ETFs has not shown signs of slowing down with the tariff policies. Taking Huaan Fund Gold ETF (518880) as an example, from the beginning of April to now, the total shares have increased from 5.93 billion to 6.712 billion, and the total size has also increased significantly by 5.347 billion yuan.

Xu Zhiyan, Assistant General Manager of Huaan Fund, told Caixin that the medium and long-term investment value of gold is still supported. From the perspective of the reasons for the gold price decline, the short-term correction is mainly due to liquidity factors.

Xu Zhiyan stated that referring to March 2020, a liquidity crisis triggered by global recession fundamentals also dragged down gold, with the maximum drawdown at around 12%. However, as the US Fed released liquidity on March 15, 2020, gold trading experienced a significant event-driven turnaround, and the gold price returned to highs two weeks later.Notably, the potential increase in US bond supply exacerbates the squeeze on liquidity, and the future US dollar liquidity is not optimistic, which may have a certain impact on the net value drawdown of gold funds.

Zhang Jundong, a fixed-income analyst at CICC, stated in a research report that on April 5, the US Senate passed a new version of the debt ceiling bill, increasing the basic deficit by 5.8 trillion dollars over the next ten years, which is more aggressive than the version passed by the House of Representatives at the end of February. It is expected that the final version of the budget reconciliation bill may be passed in May-June, at which time the supply of US bonds may rise significantly, causing a greater squeeze on liquidity, and the real liquidity shock may not have arrived yet.

Under the temporary suspension of "reciprocal tariffs," can gold ETFs still be bought?

According to media reports, UBS stated in a report that in the short term, the gold market has indeed entered a technical overbought territory, but investors are still generally confident in gold and remain cautious about the US market. However, if Trump's trade policy stance softens, it may weaken gold's defensive attributes, and the technical downside support may reach $2,850/oz.

However, under the US's temporary suspension of "reciprocal tariffs" today, the gold price continued to rise, with spot gold rising by 1.6% at one point, reaching a high of $3,132.44/oz.

In the view of market analysts, although tariffs on other countries have been suspended for 90 days, the US continues to impose additional tariffs on Asia's largest metal consumer market, escalating the already heated trade war and once again enhancing gold's safe-haven attributes. The 14 gold ETFs in the market once again showed a collective trend of opening higher with a gap and rising today, with a year-to-date return growth rate of over 17.5%.

Notably, after several days of fluctuating at highs, several gold-themed funds, including E Fund Gold Theme Fund (LOF), ChinaAMC Gold and Precious Metals Fund (LOF), and Harvest Gold Fund (LOF), have recently continuously warned of high premium risks. The cumulative increases of the above gold-themed funds this year have all exceeded 40%, significantly higher than the net value increases of the fund shares.

The Shanghai Gold Exchange also issued an announcement today, stating that recent international situations are complex and volatile, with significant fluctuations in precious metal prices and increased market risks. Members are requested to enhance risk awareness, continue to refine and implement risk emergency plans, and maintain stable market operations. At the same time, investors are reminded to take risk prevention measures, reasonably control positions, and invest rationally.

Xu Zhiyan told Caixin,The pricing logic of gold is closely related to the global macro situation, and it is difficult for individual investors to time the market. Short-term gold volatility will still be significant, and investors are advised to avoid chasing highs and selling lows, focusing instead on the medium and long-term allocation logic of gold.

"In the medium and long term, since the collapse of the Bretton Woods system, gold has decoupled from the US dollar. Over the past 50 years, the annualized yield of COMEX gold prices has exceeded 8%, and gold has shown extremely low correlation with major asset classes such as stocks and bonds. The demand for gold as an anti-stagflation asset has surged. Therefore, allocating gold funds can still effectively diversify risks and optimize investment returns," Xu Zhiyan said.