Global gold ETFs see highest outflows since March 2021: WGC

Global gold exchange-traded funds (ETFs) registered web outflows of $4.5 billion in July. This was the third consecutive month of outflows and the worst since March 2021, based on a report by the World Gold Council. 

Such funds had logged $1.7 billion of outflows in June and $3.1 billion outflows in May. 

Indian gold ETFs witnessed slight outflows as traders took earnings amid a pointy correction within the home gold worth and the expectation of additional weak point. Despite web outflows throughout the month, India has managed to squeak out year-to-date inflows of virtually one tonne. 

According to the report, a stronger US greenback and COMEX web lengthy positioning – the bottom since April 2019 – helped push the gold worth down by means of the $1,800 per ounce assist degree. Gold completed July at US$1,753, down 2.8% on the 12 months. 

Overall, year-to-date world inflows stand at round 153 tonnes or $10.3 billion. 

“Despite outflows in latest months, 2022 inflows almost offset 2021 outflows, highlighting continued strategic demand for gold. Total holdings on the finish of July stood at 3,708 tonnes or $209 billion, up 5% on the 12 months,“ WGC mentioned within the report. 

All areas besides Asia skilled outflows in July. North American holdings led outflows, falling $2.8 billion, pushed by the biggest and most liquid US funds. 

“The 75-basis level fee improve by the Federal Reserve helped propel the greenback index to a 20-year excessive. This, together with a late-month rebound in equities inspired North American traders – a minimum of tactical ones – to shift into riskier belongings,” the report mentioned. 

Further, regardless of web outflows within the area, the inflows of low-cost gold ETFs in North America continued the month-to-month pattern that we’ve seen for almost 90% of the time over the previous 4 years, highlighting continued development within the area. 

European funds misplaced $2.1 billion, led by outflows in UK-based funds. This got here on the again of the EU elevating charges for the primary time in 11 years and by a larger-than-expected quantity of 50bp. 

Funds in Asia confirmed a powerful bounce in demand ($446 million) after a blistering first half of outflows. All the inflows got here from China, which had the worst absolute outflows throughout the first half of the 12 months, primarily because of revenue taking amid a powerful native gold worth in Q1. 

In phrases of outlook, WGC mentioned that the market response to the July Fed assembly could encourage a extra sustained fall within the US greenback and run up in threat belongings. “This may benefit gold however might also threat strengthening the Fed’s resolve,” the council said. 

“Historical analysis suggests that current futures market positioning in gold, the US dollar and US 10-year Treasury combined could signal a good probability of positive forward returns for gold,” it added.

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