The worst half-year (H1) losses for gold exchange-traded funds (ETFs) have occurred in more than ten years.
According to a report by the World Gold Council (WGC), global gold ETFs lost USD 6.77 billion between January and June of 2024, making this year’s H1 the worst since 2013.
While Asia turned out to be the only region with inflows, several markets, especially in North America and Europe, saw heavy outflows.
Nonetheless, recent inflows and a significant rise in the price of gold have caused the total assets under management (AUM) of gold-oriented exchange-traded funds (ETFs) to increase by 8.8% year to date.
During that time, total holdings decreased by 120 tonnes (or 31.9%) to 3,105 tonnes, which is significantly less than the monthly high of 3,915 tonnes that was recorded in October 2020.
Top Performer
Asia was the only major market to record positive flows in the first half of the year, with inflows totalling USD 31 billion, exceeding all other markets. This was largely due to the region’s strong gold performance in major currencies and the weak value of non-USD currencies, which attracted a lot of investors.
However, the combined outflows from North America and Europe totalled USD 9.8 billion.
“Western gold ETF investors did not react as anticipated to the rise in the gold price – which commonly drives up investment flows – amid a high level of interest rates and a more risk-on sentiment generated by the AI boom,” the report said.
June Inflows
Globally, gold ETFs received USD 1.04 billion in inflows in June 2024; all regions saw gains, except North America.
Funds in other regions saw a slight inflow of USD 37 million, with Australia and South Africa leading the way. Other regions experienced mild outflows during the month.
The aggregate holdings of gold ETFs increased further, and their total assets under management (AUM) stayed steady at USD 233 billion.