The firm launched Singapore-dollar trading of its SPDR Gold Shares on Wednesday, mirroring its listing in Hong Kong and Japan, which are also cross-listed in the local currency.

«Based on our groundwork over the past few years, and from discussions with exchanges, we figured that a SGD trading counter would increase interest and cater to the demand from retail investors here,» Robin Tsui, State Street vice president, SPDR gold strategy, APAC, told finews.asia.

«In recent years, there has been a tendency to trade locally domiciled or local currency gold ETFs, and gold ETFs offer a simple and cost-effective way to get exposure to gold,» Tsui said.

SPDR Gold Shares, which tracks the spot price of gold bullion, is the only gold ETF on SGX, which launched in 2006 in USD. It was the most traded ETF on the bourse in 2020, with a trading volume of $1.18 billion. 

Inflation Hedge

Gold ETFs are coming off a record year which saw about $48 billion in inflows amid economic instability prompted by the coronavirus pandemic. However, they save seen significant outflows in 2021, driven by rising U.S. Treasury yields.

Globally, gold ETFs have seen about $7.2 billion in outflows year to date, but the balance remains positive in Asia, where it has seen about $830 million in inflows.

«The sentiment has improved compared to what we saw earlier this year. Yields are declining and the dollar is not as strong as it was in the last few months. Asian investors are trading lots of gold ETFs and physical gold as they're still bullish on the outlook,» Tsui said.

Replaced by Crypto?

Many comparisons have been made between gold and crypto and their roles as a portfolio hedge, particularly with spectacular price increases many cryptocurrencies have seen in the past few years.

«They have different functions in a portfolio. If you look at gold in general, it is still a safe haven that have demand outside of financial markets. Bitcoin is speculative, and demand is being driven by expectations of rising prices,» Tsui said.

«Bitcoin's performance in May, when its price fell by about 30 percent, made many investors realize that the two asset classes are not similar. Another thing to consider when looking for a hedge is bitcoin's liquidity is much lower than gold, and you want that liquidity in times of market distress,» Tsui added.