In May 2024, physically backed gold ETFs experienced their first monthly inflow since the same period last year, according to the World Gold Council (WGC).

The World Gold Council (WGC) is an influential international trade association focused on the gold industry. Founded in 1987 and based in London, it has a global presence with offices in India, China, Singapore, the UAE, and the United States. The WGC’s primary mission is to promote and sustain demand for gold across various sectors. It achieves this through comprehensive market development, which includes conducting extensive research and providing insights into gold’s economic role and performance. This research supports gold as a reliable investment and wealth preservation tool.

Additionally, the WGC improves access to gold by launching innovative investment products, such as the SPDR Gold Shares ETF and gold accumulation plans in India and China. The Council also sets high industry standards, promoting transparency and ethical practices through initiatives like the Conflict-Free Gold Standard and the Responsible Gold Mining Principles. By working with policymakers, regulators, and industry stakeholders, the WGC aims to foster a trustworthy and efficient gold market.

The WGC’s “Gold ETF Flows: May 2024” report, which was released on June 6, says that these inflows amounted to $529 million, driven by a stronger gold price which rose by 2%. The total assets under management (AUM) for gold ETFs increased by 2% to $234 billion, marking the highest level since April 2022. The WGC reported that improved demand for gold ETFs in May led to collective holdings rebounding to 3,088 tonnes, though still 8.2% below the 2023 average.

The WGC highlighted that European and Asian funds were the primary drivers of global inflows. May represented Asia’s 15th consecutive month of inflows, while Europe recorded its first positive flow since last May. In contrast, North American fund flows turned slightly negative.

The WGC noted that North American gold ETFs saw negative flows amounting to $139 million in May. This followed two months of positive inflows, with the May outflow being the smallest since December 2019. The WGC attributed this to a gold price rally that led to the exercise of in-the-money calls, resulting in net share creations and inflows. However, the WGC observed that hawkish Federal Reserve minutes towards the month’s end weighed on the gold price, leading to outflows.

The WGC reported that Europe’s gold ETFs saw inflows of $287 million in May, ending a twelve-month streak of outflows. These inflows were driven by expectations of a rate cut by the European Central Bank, particularly affecting funds in Switzerland and Germany. Conversely, UK-listed funds experienced outflows due to political uncertainties and inflation concerns, according to the WGC.

In Asia, the WGC highlighted that the region saw its 15th consecutive monthly inflow, totaling $398 million in May. China was the primary driver with $253 million in inflows, spurred by a record-high local gold price and a weak local currency. Japan also contributed with significant inflows due to favorable local gold prices.

The WGC mentioned that funds from other regions saw minor outflows, primarily from Turkey, offsetting gains in South Africa. This information provided by the WGC reflects the shifting dynamics in gold ETF investments globally.

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