Gold-backed ETFs experienced their 11th consecutive month of declines, according to the World Gold Council (WGC), with total holdings slipping by 33 tonnes to 3,080 tonnes, the lowest amount in over four years. This decline was attributed to heavy liquidations in Europe, which led to outflows equivalent to $2 billion. Despite this, a rise in the gold price resulted in total assets under management (AUMs) increasing to $229 billion, with gold prices reaching record highs of $2,364 per ounce in April due to concerns over the macroeconomic and geopolitical landscape driving interest in the safe-haven metal.
The decline in gold-backed ETFs was driven by further liquidations in Europe, the second-largest gold ETF marketplace in the world, with European funds experiencing outflows of 52 tonnes, resulting in aggregate holdings falling to 1,279 tonnes. This marked the eleventh consecutive month of decrease, with outflows totaling $4 billion, despite AUMs rising to $95 billion. The WGC attributed these outflows to investors scaling back their expectations of early rate cuts from the Bank of England and the European Central Bank, despite cooling inflation readings in the region.
On the other hand, inflows into North American and Asian gold ETFs helped offset the losses in Europe, with North American funds receiving a one-tonne inflow that raised total holdings to 1,575 tonnes. This marked the second consecutive month of positive flows, with inflows totaling $124 million and AUMs improving to $117 billion. The WGC explained that the strong performance of the gold price triggered ITM call options of major gold ETFs, leading to sizable inflows, while geopolitical risks and financial market volatilities also drove inflows into various North American gold ETFs. In Asia, gold-backed ETFs saw inflows of 19 tonnes, equivalent to $1 billion, bringing total metal holdings to 167 tonnes and AUMs to $13 billion by the end of the month. The drivers for these inflows included a sluggish equity market, expectations of a weaker local currency, promotional efforts from ETF providers, and strong price performance.
The WGC highlighted that China was a major contributor to the inflows in Asia, with gold ETFs witnessing record monthly inflows and reaching their highest AUM ever. These positive developments were attributed to a combination of factors including a weaker local currency, increasing promotional efforts from ETF providers, and strong performance in the gold price. The WGC also noted that spikes in geopolitical risks and financial market volatilities played a role in driving inflows into North American gold ETFs. Despite the overall decline in gold-backed ETFs due to heavy liquidations in Europe, the rise in the gold price and positive inflows in North American and Asian markets helped boost total assets under management to $229 billion.