Global gold-backed exchange-traded funds (ETFs) saw positive monthly flows in May for the first time in a year, according to the World Gold Council (WGC). Total fund holdings rose to 3,088 tonnes by the end of the month, with inflows totaling $529 million. This, combined with a rising gold price, pushed cumulative ETF assets under management (AUMs) to $234 billion. However, physical holdings remained below the average recorded in 2023.
European funds experienced their first inflow in a year in May, with total holdings rising by 6 tonnes to 1,285 tonnes. Inflows amounted to $287 million, bringing AUMs in the region to $97 billion. This was driven by buying on the mainland, as investors anticipated rate cuts by the European Central Bank. Swiss ETFs saw their first inflow since July 2023, while Germany had only its second inflow of the year. However, British funds experienced outflows as a UK election and higher-than-expected inflation pushed back rate cut expectations by the Bank of England.
In contrast, North America saw a fresh outflow in May, with aggregate physical holdings dropping by 2 tonnes to 1,573 tonnes. Despite this, total AUMs in the region reached $119 billion. Outflows amounted to $139 million, with negative flows returning following two consecutive months of inflows. Investor interest may have been swayed by spikes in geopolitical risks, while hawkish signals from the Federal Reserve and rallying share markets may have also diverted attention from gold as a safe haven asset.
In Asia, ETF inflows remained solid for the fifteenth straight month in May. Physical holdings rose by 5 tonnes to 172 tonnes, with inflows totaling $399 million and AUMs reaching $14 billion. This marks the region’s smallest inflow since November 2023, but Asia’s continued inflow streak is the second longest on record. Buying activity in the region was once again dominated by China, highlighting the ongoing strength of the market.
Overall, while May saw positive flows in Europe and Asia, North America experienced outflows. The global gold-backed ETF market remains influenced by factors such as central bank policies, geopolitical risks, and market sentiment. Despite fluctuations in physical holdings and investor behavior, the gold price reaching new record highs has continued to support strong AUM levels across regions. As investors navigate uncertainties in the global economy, gold remains a popular choice for portfolio diversification and hedging against market volatility.
