Gold ETFs Attract $1.4 Billion June Globally

Global physically backed gold Exchange Traded Funds (ETFs) witnessed second consecutive monthly inflows, attracting $1.4 billion in June. The inflows were widespread, with all regions seeing positive gains except for North America which experienced mild losses for a second month.

In general, lower yields in key regions and non-dollar currency weaknesses increased gold’s allure to local investors. Global gold ETFs’ collective holdings continued to rebound while their total AUM remained stable at $233 billion due to a lower gold price in the month, the World Gold Council (WGC) said.

Year-to-date (y-t-d), global gold ETFs have lost $6.7 billion, their worst H1 since 2013. However, driven by recent inflows and a sizable rise in the gold price, their total assets under management (AUM) have increased by 8.8% y-t-d.

Total holdings have dropped by 120 tonnes (-3.9%) to 3,105 tonnes during the period, well below their October 2020 monthly high of 3,915 tonnes. While Asian funds attracted a record $3 billion during the first half of this year, they were significantly outpaced by collective outflows in North America and Europe to the tune of $9.8 billion.

Regional Overview

North America continued to see mild outflows, shedding $573 million in June. The dollar strength and continued equity rally may have drawn investor attention away from gold despite falling Treasury yields. Nonetheless, flare-ups in geopolitical risk prompted sporadic inflows, partially offsetting larger outflows during the month.

North America also saw outflows of $4.9 billion during H1 of 2024, the largest in three years. However, a 13% rise in the gold price during the period also resulted in a 7.7% increase in North America’s total AUM. Meanwhile, the region’s collective holdings reduced by 78 tonnes.

European funds added $1.4 billion in June, the second consecutive month of inflows and this helped further narrow Europe’s H1 outflows to $4.9 billion. The region’s central banks adopted a different path to that of the US Fed.

For instance, in June, the European Central Bank (ECB) delivered its first rate cut for almost five years whilst the Swiss National Bank lowered rates for the second time this year.

In the UK, the Bank of England hinted that a potential cut was on the cards but left rates unchanged following a surprise general election announcement. As such, lowering yields were a key contributor to the region’s inflows.

Additionally, falling equities and political uncertainties related to elections in the UK and France, which sparked notable inflows there, also pushed up investor interest in gold.

Nonetheless, 2024 saw the worst first half for European funds since 2013 (-$8 billion). Despite a 6% fall in holdings, total AUM of European funds experienced a 6.3% rise during the first half, thanks to the higher gold price, WGC added.

Asia extended its inflow streak to 16 months, attracting $560 million in June. Similar to previous months, Asian inflows were mainly driven by China, which added $429 million in the month.

Among factors that kept Chinese investor interest in gold elevated, WGC believes persistent weaknesses in stocks and the property sector, as well as continued depreciation in the RMB were highly relevant. Japan also witnessed its 16^th consecutive monthly inflow in June, primarily supported by a weakening yen.

Asia registered inflows of $3.1 billion in H1, significantly outpacing all other markets and the only region witnessing positive flows. This represents the strongest ever H1 for Asian funds, mainly driven by record-level inflows into China and Japan.

Supported by record-breaking inflows and a higher gold price, the total AUM of Asian funds reached $14 billion, the highest ever, while collective holdings increased by 41 tonnes.

Following two consecutive monthly outflows, funds in other regions captured a small inflow of $37 million in June, led by Australia and South Africa. In H1, funds listed in other regions saw mild outflows, mainly from Turkey, WGC added.