Gold ETF Loses Luster as Rising Rates Hurt Haven Hunt: ETF Watch

(Bloomberg) -- Investors pulled out of the second-largest exchange-traded fund tracking gold as climbing interest rates dimmed the precious metal’s appeal as a safe haven.

The $12 billion iShares Gold Trust, known by its ticker IAU, had about $170 million in outflows on Wednesday, the most since March 2017. The ETF has taken in almost three times as much cash this year as its larger competitor, the $36 billion SPDR Gold Shares fund, ticker GLD.

Gold ETF Loses Luster as Rising Rates Hurt Haven Hunt: ETF Watch

Gold has struggled to hold onto its gains in 2018 as the dollar strengthens and borrowing costs in the U.S. rise, hurting the appeal of the non-interest bearing metal. Data released by the Commerce Department Thursday showed consumer spending in April topped estimates as inflation held at the Federal Reserve’s 2 percent target, keeping policy makers on track to raise rates for the second time this year.

Investors have been pulling cash from IAU since its gold holdings rose to a record 9.4 million ounces in mid-May. The ETF held 9.2 million ounces as of May 30, the latest available data.

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