Gold ETF Flows: October 2024

North America inflows go four-for-four

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Highlights

  • Global gold ETFs have seen inflows for six months in a row, supported by North America and Asian flows.
  • Y-t-d, collective holdings of global gold ETFs rose 18t, the first positive reading in 2024, and total AUM surged by 33% having received an additional boost from the rocketing gold price.
  • Global gold trading volumes edged higher, supported by improved OTC and ETF activities.

October in review

Global physically backed gold ETFs1 extended their inflow streak to six months, adding US$4.3bn during October (Table 1).2 Continued inflows and the record-shattering gold price lifted global assets under management (AUM) a further 5% to another month-end record of US$286bn. Meanwhile, collective holdings rose 43t to 3,244t. North America once again led global inflows while Europe remained the only region with outflows. 

Y-t-d global gold ETF demand – led by Asia – has turned positive (+18t) for the first time this year. And so far in 2024, inflows into global gold ETFs have reached US$4.7bn. Supported by recent inflows and the rocketing gold price, total assets under management (AUM) have soared by 33%. All regions other than Europe have experienced inflows y-t-d. 

Regional overview

North American funds have witnessed four consecutive months of inflows, adding US$2.7bn in October. Continued gold ETF buying may have come as a surprise to many as yields rose and the dollar strengthened, leaving investors re-thinking the future interest rate path amid robust US economic performance. We believe demand for gold was helped by uncertainty surrounding the US Presidential election.3 And the military escalation in the Middle East conflict, along with rumours that North Korea could join the Russian front against Ukraine may have contributed to rising gold ETF demand.4 We believe that an element of “FOMO” – fear of missing out – amid the continued surge in the gold price has also helped to boost investor interest. 

European funds continued to see outflows in October, shedding US$563mn. Notably, outflows were seen across major markets in the region – unlike previous months where the UK bore the brunt of losses. Rebounding yields in the region pushed up the opportunity cost of holding gold and are likely a major driver. Despite the European Central Bank’s (ECB) further 25bps rate reduction in the month and a worsening economic picture, yields of local government bonds climbed5 .This was mainly a result of global investors’ re-assessment of central banks’ rate paths, particularly the US Fed. Similarly, UK Gilt yields also edged higher during the month, prompting gold ETF outflows. 

Meanwhile, weaker local currencies – amid deteriorating economic prospects in Europe and a strengthening dollar – resulted in outflows related to FX-hedging products, adding to the region’s losses during October.

Asian funds attracted US$2.1bn in October, extending the region’s inflow streak to 20 months. China dominated inflows: the record-shattering local gold price and amplified equity market volatility, following a sizable rally in late September fuelled by aggressive stimulus announcements, led to the strongest monthly inflow on record. Meanwhile, Indian gold ETF inflows continued, driven by similar factors: attractive gold price momentum, higher stock market volatility, and the lingering positive benefit of adjustments to the long-term capital gains treatment of gold.6

Funds elsewhere reported inflows for a fifth successive month. October’s US$68mn inflows were once again mainly driven by Australian and South African funds. In Australia the weakening Aussie dollar enlarged gold’s return locally and likely pushed up investor currency hedging needs, contributing to the region’s fifth consecutive monthly inflow. Meanwhile, South Africa continues to benefit from cooling inflation, paving the way for a higher probability of rate cuts7 and driving the country’s six-month inflow streak. 

 

Gold trading volumes climbed further

Global gold trading volumes averaged US$268bn in October, 4% higher m/m and remaining well above the 2023 average of US$163bn. Global OTC activities rose 4% m/m to US$181bn/day last month. Exchange-traded volumes remained stable: the minor 2% fall at the COMEX cancelled out a 20% m/m rise at Shanghai Futures Exchange. Meanwhile, the liquidity of global gold ETFs improved by 12% to US$2.9bn. 

COMEX gold future participants dialled back their total net longs, which reached 905t by the end of October, a 3% m/m fall. This was mainly driven by money managers – their net long positions reduced by 5% to 737t. While the notable rebound in the US 10-year Treasury yield may have negatively impacted trader sentiment, profit-taking activities could be another contributor.

 

Gold ETF flows

Data as of

Demand captures changes in global/regional gold holdings; fund flows capture the net amount of money (in USD) that comes in or out of gold ETFs globally/regionally. See methodology note.

 **Note: As of 1 July 2021, this dataset now includes several enhancements, which we believe improve the accuracy and usability of the data.

  • Fund aggregation: funds that include more than one asset or sub-asset class are now grouped and displayed as a single product. This allows tracking of total assets of individual funds over time more easily. This change applies mainly to various European funds (and a few other regions) which, for example, offer different listings of the same fund structure and that were previously treated in our universe, for simplicity, as distinct products.
  • Holdings accuracy: the estimation of gold holdings by converting net asset values (NAVs) of the different funds to tonnage now uses relevant regional gold price benchmarks for funds in China and India, which we believe is more precise. Previously, for ease of calculation, we used the LBMA Gold Price PM for all funds. Thus, differences between those benchmarks and the LBMA Gold Price, whether due to timing or due to local premiums, could result in a less accurate estimation of the gold holdings. This was especially noticeable for funds listed in China and India during days when the gold price experienced significant moves or there were regional holidays. 
  • Previously, changes in tonnes were calculated by converting a fund’s AUM (in USD) into gold holdings (in tonnes) and computing the difference over periods. However, currency movements and large daily and weekly gold price movements could distort the difference between tonnage change and US-dollar fund flows during short time horizons. We therefore adjusted tonnage change as a function of fund flows versus AUM and replaced the tonnage change field with fund flows (tonnes).
  • Now, for most funds, we estimate US-dollar fund flows, as described in section 2.3.2 below, and then convert those flows to fund flows (tonnes).
    Fund flows (tonnes) and US-dollar fund flows will now represent a more aligned explanation of investment demand for gold ETFs, while the true holdings of a fund, in US dollars and tonnage, will remain a close estimate, impacted by the currency and price volatility described above.
  • Based on our initial analysis, the changes are not likely to have a material long-term effect on historical information, particularly on a global or regional aggregate basis, but will adjust short-term fluctuations that can sometimes occur due to input data and timing variations.
  • As of 1st September the fund flows data includes an additional tab showing tonnage flows (Delta tonnes) for monthly and daily periods.

These changes may lead to some – generally minor – revisions of historical data.

Footnotes

  1. We 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.

  2. We 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 detail, see our ETF methodology note.

  3. For more, see Uncertainty reigns in an election closer 'than any I have ever seen' & Betting platform shows higher chance of Trump win than rivals |Bloomberg

  4. For more, see: Officials say North Korea sent troops to Russia. What would that mean for war with Ukraine? | AP News and Live updates: Israel kills Hamas leader Yahya Sinwar, vows to continue war in Gaza | CNN

  5. For more, see: ECB lowers rates and eyes more cuts as economy sags | Reuters

  6. Indian gold ETF flows are updated based on available data till 25th October.

  7. For more, see South African inflation slowing to 3.8% backs rate cut bets | Bloomberg