Q. With reference to Gold Exchange Traded Funds(ETFs), consider the following statements;
1.They are passive investment instruments that are based on gold prices and invest in gold bullion.
2.Investors will invest more when there is a fall in gold prices.
Which of the statements given above is/are correct?
Answer: A
Notes:
Statement 1 is correct: They are passive investment instruments that are based on gold prices and invest in gold bullion.
Statement 2 is incorrect: Gold Exchange Traded Funds(ETFs) witnessed a net outflow of Rs 457 crore in July as investors parked their money in other asset classes as part of their portfolio rebalancing strategy. The significant Gold ETFs outflows seem to have risen out of investors’ expectations of a rising interest rate cycle leading to a fall in gold prices.
Source: Indian Express
