Global gold ETFs saw inflows four months in a row: all regions recorded positive flows with Western funds leading the wayStrength in the gold price and recent inflows have increased global AUM by 20% y-t-d, to another month-end peak of US$257bnGlobal gold trading remained active: over-the-counter (OTC) and gold ETF volumes rose while exchange-traded activities cooled.
Global physically-backed gold ETFs1 added US$2.1bn in August, extending their inflow streak to four months (Table 1, p2).2 All regions reported positive flows: Western funds once again contributed the lion’s share. The 3.6% rise in the gold price, paired with further inflows, lifted global assets under management (AUM) by 4.5% to another month-end peak of US$257bn.3 Collective holdings continued to rebound, increasing by 29t to reach 3,182t by the end of the month.
Thanks to non-stop inflows between May and August, global gold ETFs’ y-t-d losses further narrowed to US$1bn. The decline in holdings so far in 2024 has also been trimmed down to 44t. Meanwhile, the total AUM jumped by 20% during the first eight months of 2024. Y-t-d, Asia has attracted the largest inflows (+US$3.5bn) while Europe (-US$3.4bn) and North America (-US$1.5bn) lead outflows.
North America saw inflows two months in a row, adding US$1.4bn in August. Easing inflation readings, a cooling labour market, and dovish messages in both the Fed’s meeting minutes and Powell’s speech at the Jackson Hole symposium all cemented the deal for a cut from the Fed in September.4 As a result, the US 10-year Treasury yield and the dollar both experienced sharp declines in AugustLucknow Investment. Lowering opportunity costs, among other factors, have led gold to another record high and fuelled gold ETF inflows. Meanwhile, the strong gold price performance led to exercises of in-the-money call options of major gold ETFs, creating sizable inflows at the expiry date.5 Additionally, rapidly escalating geopolitical tensions in the Middle East and the Russia–Ukraine conflict during the month, we believe, were another key contributor.
European funds attracted US$362mn in August, their fourth consecutive monthly inflow, albeit at a slower pace than previous months. Funds listed in Switzerland and the UK led inflowsSurat Wealth Management. Earlier in the month, fear stemming from headlines around the unwind of the popular “yen carry trade” resulted in a spike of volatility in global equity markets. This likely boosted safe-haven demand as gold ETFs concurrently saw increased inflows in the region. And prospects of further interest rate cuts from local central banks may have provided support – albeit they are expected to adopt a steadier and slower pace than the US Fed.6
Inflows related to FX hedging products were notable, especially in Switzerland, amid the strengthening local currencies against the dollar. And intensifying geopolitical risks were another key contributor to the region’s inflows.
Asian funds extended their inflow streak to 18 months. Nonetheless, the US$32mn addition is the smallest since May 2023. India once again led inflows in the region, marking the strongest month since April 2019, mainly driven by continued positive momentum from the budget announcement in July and the local gold price strength.7 Japan also saw notable inflows – for the sixth consecutive month – which might be related to amplified equity market volatility and lower Japanese government bond yields in August. In contrast, China led outflows, ending its eight-month inflow streak.
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