Gold ETF Flows: July 2024 #NewsETFs

July in review

Global physically-backed gold ETFs ¹ have now seen inflows three months in a row, adding US$3.7bn in July.² Notably, all regions reported positive flows this month, with Western gold ETFs contributing the most. A combination of the July inflow and a 4% rise in the gold price pushed total global assets under management (AUM) 6% higher to US$246bn, a new month-end record.³ Collective holdings concluded July with a 48t increase, reaching 3,154t.

Successive inflows over recent months have narrowed the y-t-d loss in global gold ETFs to US$3bn. And while collective holdings have fallen by 72t (-2%) so far in 2024, their total AUM rose by 15%, supported by a 17% increase in the gold price. European and North American funds remain on the red for the year despite the change in trend, while Asia has recorded sizable inflows.

Regional overview

North American funds saw inflows of US$2bn, more than reversing minor outflows from May and June. July was unprecedented in the political front with the assassination attempt on Trump followed by Biden stepping down from the presidential race.⁴ Gold ETF saw inflows around both dates, pointing to increased safe-haven demand. Meanwhile, falling inflation, the cooling labour market and the US Fed Chair Powell’s note that a cut in September is “on the table” during the recent meeting intensified investor expectation of easing soon.⁵ In turn, US Treasury yields fell, and the dollar weakened, pushing the gold price to a record high during the month and spurring investor interest in gold ETFs. Furthermore, we believe equity market volatilities, especially during the second half of July, also supported gold ETF demand.

So far in 2024, North American outflows have amounted to US$2.9bn and collective holdings have fallen by 52t, second only to European losses. Nonetheless, driven by recent inflows and the notable gold price strength, the total AUM of North American funds has risen by 14% y-t-d.

Europe has now recorded inflows over three successive months, attracting US$1.2bn in July, the strongest since March 2022. The UK and Switzerland led inflows. A common backdrop across the region in July has been declining government bond yields. Although the European Central Bank left rates unchanged at their July meeting, Lagarde’s comment that the September decision is “wide open” intensified investor expectation for another cut in the near future.⁶ Meanwhile, investors had expected the Bank of England to start its easing cycle on 1 August – and it lived up to the market consensus, cutting 25bps, the first time in four years.⁷ In addition, a commitment to address fiscal challenges from the new UK Chancellor, Rachel Reeves, helped restore some confidence in public finances and contributed to a lowering of UK gilt yields. And as the opportunity cost of holding gold fell, investor interest in gold ETFs rose in the region – further boosted by a record-setting gold price.

Recent inflows have narrowed the European y-t-d losses to US$3.7bn and trimmed the decline in holdings to 1,319t. Similar to North America, a higher gold price, alongside recent positive demand, lifted the total AUM of the region’s funds to US$103bn, a 12% rise.

Asia extended its inflow streak to 17 months, attracting US$438mn in July. India led inflows. Strong Indian demand was mainly aided by changes announced in the recent budget which effectively shortens the long term investment qualifying time period and lowered the associated tax rate, which makes the investment landscape for gold ETFs more equitable and attractive. A strong gold price in the local currency also helped. Net inflows were also observed in China and Japan – likely driven by similar factors, namely equity market weaknesses and strong local gold price performances in the month.

Despite July’s slowdown, Asia has registered inflows of US$3.6bn y-t-d, significantly outpacing all other markets, driven mainly by China and Japan. Supported by record-breaking inflows and a higher gold price, the total AUM of Asian funds reached US$15bn, the highest ever, while collective holdings increased by 47t.

In other regions, July marks a second consecutive month of mild inflows, mainly from South Africa, where post-election political uncertainties may have helped.⁹ Australia also experienced positive flows, likely fuelled by a strong gold price performance in the depreciating local currency. So far, in 2024 funds listed in other regions saw inflows of US$40mn, due mainly to South Africa.

Gold ETF holdings and flows by region

Monthly

Trading volumes rebounded

Gold trading volumes rose across all markets, averaging US$250bn per day in July, a 27% rise m/m and firmly above the 2023 average of US$163bn/day. Similar to June, stronger LBMA volumes drove global over-the-counter (OTC) trading activities 16% higher to US$150bn/day, representing a 13% m/m rise in tonnage terms. Trading volumes across all major exchanges rose in July, a staggering 51% increase m/m with COMEX leading the rise. Trading activities of global gold ETFs also rose, increasing by 9.3% m/m, mainly driven by North American funds.

COMEX total net longs saw a notable rise, ending July at 783t, 2% higher m/m. Continued strength in gold and falling yields amid intensifying expectations of lower interest rates ahead pushed money manager net longs – the major component of COMEX gold net longs – to 588t by the end of July. This represents a 2% m/m rise and the highest month-end level since February 2020.

Gold ETFs holdings and flows

By region
Monthly

By countryMonthly

Top 10 fund flows

Bottom 10 fund flows

*We monitor how fund assets change through time by looking at two key metrics: demand and fund flows.

• Gold ETF demand is the change in gold holdings during a given period. We use this metric to calculate the quarterly demand estimates reported in Gold Demand Trends.

• Fund flows represent the amount of money – reported in US dollars – that investors have put into (or retrieved from) a fund during a given period. For more details, see our methodology note.

† ‘Global Inflows/positive demand’ refers to the sum of changes of all funds that saw a net increase in holdings over a given period (e.g., month, quarter, etc.). Conversely, ‘global outflows/negative demand’ aggregates changes from funds that saw holdings decline over the same period.

Gold ETFs holdings

Click to enlarge

Footnotes

¹We define gold ETFs as regulated securities that hold gold in physical form. These include open-ended funds traded on regulated exchanges and other regulated products such as closed-end funds and mutual funds. A complete list is included in the gold ETF section of Goldhub.com.

²We track gold ETF assets in two ways: the quantity of gold they hold, generally measured in tonnes, and the equivalent value of those holdings in US dollars (AUM). We also monitor how these fund assets change through time by looking at two key metrics: demand and fund flows. For more details, see our ETF methodology note.

³Based on the LBMA Gold Price PM.

⁴For more, see: Read: Joe Biden’s statement dropping out of 2024 presidential race & Trump rally shooting: Ex-president injured in assassination attempt at rally that leaves spectator and gunman dead

⁵For more, see: Fed recap: Chair Powell gives September rate cut signal traders were hoping for (cnbc.com)

⁶For more, see: ECB keeps rates unchanged, September move “wide open”

⁷For more, see: Bank of England lowers rates to 5% in first cut since 2020 (ft.com)

⁸For more, see: Reeve’s Fiscal Statement: Key takeaways

⁹For more, see: South Africa’s ANC expels former president Zuma after election betrayal (msn.com)

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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.