Mitsubishi UFJ Trust’s Gold ETF Grows to Record as Prices Drop

Jun 09, 2014 2:38 am ET

June 9 (Bloomberg) -- Holdings of Mitsubishi UFJ Trust and Banking Corp.’s exchange-traded gold fund rose to a record as falling bullion prices attracted investors in Japan.

Assets in the ETF, the biggest among five such products in the country, increased by 197 kilograms to an all-time high of 7.043 metric tons on June 2, according to data from the Tokyo- based bank. That was the first gain this year and coincided with yen-denominated futures on the Tokyo Commodity Exchange closing at a five-month low of 4,082 yen per gram, equivalent to about $1,240 per troy ounce.

Global holdings of bullion-backed exchange-traded products have dropped about 2.6 percent in 2014 to 1,717.84 tons, according to data compiled by Bloomberg. Gold in London closed at a four-month low of $1,243.93 a troy ounce on June 2, according to Bloomberg generic pricing. It traded at $1,252.98 at 8:27 a.m. Tokyo time.

Demand from Japanese investors has increased since local prices fell below 4,100 yen per gram, Osamu Hoshi, the general manager of Mitsubishi UFJ Trust’s fund, said in an interview on June 3. The majority of investors in the fund are individuals rather than institutions, he said.

Prime Minister Shinzo Abe’s policies to stoke economic growth have weaken the yen and contributed to consumer price increases, excluding fresh food, of 3.2 percent in April, the fastest pace since 1991. The Japanese currency fell about 18 percent against the dollar in 2013. It’s climbed 2.6 percent so far this year.

“In Japan, gold has been attracting more interest as a hedge against inflation and the weaker currency,” said Itsuo Toshima, the founder of gold consultancy firm Toshima & Associates.