Gold ETF Outflows Cooled During July

The pace of outflows from global gold-backed exchange-traded funds (ETFs) slowed in July, data from the World Gold Council (WGC) shows.

Funds backed by physical gold experienced outflows of $2.3 billion last month. This was equivalent to some 34 tonnes, and pushed total holdings down to 3,387 tonnes.

However, this was down from the 56-tonne outflow recorded in June.

Meanwhile, total assets under management (AUMs) rose 2% to $215 billion in July “as a rebound in gold price more than offset negative flows,” the WGC said.

The council noted that the improved bullion price also helped moderate outflows from gold ETFs. Gold values rose more by than $40 per ounce in July to end the month around the $1,970 marker.

During the first seven months of 2023, gold ETFs experienced outflows of $4.9 billion. There was a cumulative reduction in holdings of 84 tonnes.

North American Holdings Drop Again

The WGC said that all regions except for Asia experienced fund outflows in July, with ETFs in North America reporting their second consecutive monthly outflow.

Funds in the region endured a $986 million outflow last month, equivalent to 16 tonnes.

This took total AUMs and holdings to $110 billion and 1,728 tonnes respectively.

The WGC noted that last month’s outflow was less than half the $2 billion recorded in June, and commented that changing forecasts for interest rates have boosted sentiment towards the yellow metal last month.

The body said that “the US Fed increased rates by 25 [basis points] in July, but with recent inflation data softening, investors expect the Fed’s current tightening cycle to end soon.”

However, it added that “while such expectations supported the gold price, they also led to investor risk-on sentiment and a rally in equities, which may have diverted investment away from gold.”

Europe Falls, Asia Bucks The Trend

Meanwhile, outflows in European ETFs totalled $1.3 billion or 19 tonnes in July. Total holdings consequently dropped to 1,480 tonnes, while AUMs sank to $94 billion.

The WGC noted that “the European Central Bank and the Bank of England lifted their policy rates to multi-decade highs” last month in response to high inflation.

It added that “combined with investor expectations of further rate hikes ahead, interest in gold ETFs remained tepid in the region.”

But funds in Asia enjoyed inflows during July thanks to strong interest from Japanese investors.

Funds added $132 million worth of metal, equivalent to 2 tonnes. This meant that aggregate holdings rose to 121 tonnes, while AUMs increased to $8 billion.