Sustained inflows in June narrowed H1 losses (2024)

Highlights

• Following the strongest month since May 2023, global gold ETFs have now seen inflows two months in a row; in June, notable European and Asian buying offset outflows from North America
• Although June and May inflows helped limit global gold ETFs’ y-t-d losses to US$6.7bn (-120t), this remains the worst H1 since 2013 – both Europe and North America saw hefty outflows while Asia was the only region with inflows
• A stronger gold price and recent inflows pushed the total AUM to US$233bn, but collective holdings remain near their lowest since 2020
• Trading volumes across different gold markets witnessed a mild decline in June; however, the H1 average remains well above its 2023 level as OTC and futures trading were exceptionally active.

June and H1 in review

Global physically backed gold ETFs1 witnessed their second consecutive monthly inflows, attracting US$1.4bn in June.2 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 US$233bn due to a lower gold price in the month.

Year-to-date, global gold ETFs have lost US$6.7bn, their worst H1 since 2013. However, driven by recent inflows and a sizable rise in the gold price, their total AUM have increased by 8.8% y-t-d. Total holdings have dropped by 120t (-3.9%) to 3,105t during the period, well below their October 2020 monthly high of 3,915t. While Asian funds attracted a record US$3bn during the first half, they were significantly outpaced by collective outflows in North America and Europe to the tune of US$9.8bn.

It is worth noting that Western gold ETF investors did not react as anticipated to the rise in the gold price – which commonly drives up investment flows – amidst a high level of interest rates and a more risk-on sentiment generated by the AI boom. In contrast, Asian flows rhymed with the price strength – weaknesses in non-dollar currencies and gold’s staggering performance in those currencies attracted investors in the region.

Regional overview

North America continued to see mild outflows, shedding US$573mn in June. The dollar strength and continued equity rally may have drawn investor attention away from gold despite falling Treasury yields.3 Nonetheless, flare-ups in geopolitical risk prompted sporadic inflows, partially offsetting larger outflows during the month.

North America saw outflows of US$4.9bn during H1, the largest in three years. However, a 13% rise in the gold price during H1 also resulted in a 7.7% increase in North America’s total AUM. Meanwhile, the region’s collective holdings reduced by 78t.

European funds added US$1.4bn in June, the second consecutive month of inflows. This helped further narrow Europe’s H1 outflows to US$4.9bn. The region’s central banks adopted a different path to that of the US Fed. For instance, in June, the European Central Bank delivered its first rate cut for almost five years whilst the Swiss National Bank lowered rates for the second time this year.4 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.5

Nonetheless, 2024 saw the worst first half for European funds since 2013 (-US$8bn). 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.

Asia extended its inflow streak to 16 months, attracting US$560mn in June. Similar to previous months, Asian inflows were mainly driven by China, which added US$429mn in the month. Among factors that kept Chinese investor interest in gold elevated, we believe persistent weaknesses in stocks and the property sector, as well as continued depreciation in the RMB were highly relevant. Japan also witnessed its 16th consecutive monthly inflow in June, primarily supported by a weakening yen.

Asia registered inflows of US$3.1bn 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 US$14bn, the highest ever, while collective holdings increased by 41t.

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

For country-level gold ETF flows, please visit: Gold ETF: Stock, Holdings and Flows | World Gold Council