Global gold-backed exchange-traded funds (ETFs) experienced a second consecutive month of inflows in June, according to the World Gold Council (WGC). Total fund holdings rose by around 18 tonnes last month to 3,106 tonnes, with inflows totaling $1.4 billion, bringing assets under management (AUMs) to $233 billion. Despite the positive trend in June, AUMs declined by $400 million from May as bullion prices retraced from record highs around $2,450 per ounce.
The WGC reported that inflows in June were widespread, with all regions except for North America seeing positive gains. Lower yields in key regions and weakness in non-dollar currencies increased gold’s appeal to local investors. However, the January-June period marked the worst first half for global ETFs since 2013, with hefty outflows in Europe and North America totaling 120 tonnes or $6.7 billion. Despite these outflows, recent inflows and a strong gold price led to a year-on-year increase in AUMs of 8.8%.
In North America, the world’s largest gold ETF market, holdings dropped by eight tonnes in June to 1,565 tonnes, with total AUMs at $117 billion. Dollar strength and an ongoing equity rally may have diverted investor attention away from gold, despite falling Treasury yields. Geopolitical risks did prompt sporadic inflows, but first-half outflows totaled $4.9 billion, the highest in three years.
In Europe, funds added 18 tonnes of gold in June, bringing total holdings to 1,303 tonnes and AUMs to $98 billion. Lower yields, falling equities, and political uncertainties related to elections in the UK and France contributed to the region’s inflows. However, European ETFs experienced the worst first half in 11 years, with outflows of $8 billion recorded. In Asia, gold-backed ETFs saw a seven-tonne inflow, lifting total holdings to 179 tonnes and AUMs to $14 billion. Asian inflows were mainly driven by China, where weaknesses in stocks and the property sector, as well as depreciation in the renminbi, were key factors.
Looking at the bigger picture, the WGC noted that despite the recent inflows in June, the global gold-backed ETF market faced challenges in the first half of 2022. Outflows in Europe and North America were partially offset by inflows in Asia, leading to an overall decline in AUMs. While geopolitical risks and lower yields in key regions contributed to increased interest in gold, the ongoing equity rally and dollar strength posed challenges for the market. Despite the difficulties faced in the first half, the WGC remains optimistic about the future of gold-backed ETFs, citing the recent positive trends as a sign of potential recovery in the coming months.
