Gold ETF Flows: January 2022

Gold ETFs bounce back to begin 2022 led by North American funds

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January highlights

Global gold ETFs drew net inflows of 46.3t (US$2.7bn, 1.3% of AUM) in January, led by North American funds – partially offsetting the region’s 2021 outflows. These combined with positive flows from Europe significantly outweighed Asian outflows. Overall, net inflows were driven largely by gold price strength and a sharp selloff in equity markets, despite a reversal in the gold price on the back of a hawkish US Fed statement towards the end of the month. 

North American inflows of 49.0t (US$2.9bn) were concentrated in US funds, which tend to be more reactive to changes in the gold price than other regions. Additionally, a significant jump in the gold price leading up to gold ETF options expiration likely contributed to some of the inflows.1 This resulted in positive flows as gold rallied by nearly 3% in the first part of January to reach an intra-month high of US$1,847/oz.2 The majority of US inflows coincided with this move, supported by a flight-to-quality amid a selloff in equity markets. 

Similarly, growth in European funds 6.7t (US$385mn) came on the heels of reports showing inflation remained elevated and above expectations for January. North American and European inflows significantly outweighed outflows from Asia, where funds lost 9.9t (-US$589mn) during the month. Outflows from Asia were driven by Chinese ETFs as investors reduced gold holdings ahead of the Chinese New Year while the gold price weakened towards the end of the month. Funds in India also experienced outflows given headwinds from rising local bond yields.3 Other regions did however attract inflows of US$27mn (0.5t) in January.4   

 

ETF flows chart

Data as of

Sources: Bloomberg, Company Filings, ICE Benchmark Administration, World Gold Council; Disclaimer

Price performance and trading volumes

Gold ended January slightly lower (-0.59%) at US$1,795/oz.5  Prices rallied for much of the month on equity market turbulence. However, this rally ground to a halt immediately after the hawkish Fed meeting in late January. This sent the US dollar soaring against both developed and emerging market currencies, and yields rose, presenting headwinds for gold. 

Daily trading averages increased back up to US$169bn in January, markedly higher than the low liquidity conditions seen in December and more in line with November 2021 levels of US$175bn. Net long positioning, via the recent Commitment of Traders (COT) report for COMEX gold futures, declined to 590t (US$34bn) – from 709t at the end of 2021 – its lowest level since the end of September.6  

For more details, see Gold Market Commentary, January 2022.

Regional flows7 

Inflows in North America and Europe outweighed outflows from Asia 

  • North American funds had inflows of 49.0t (US$2.9bn, 2.8%)
  • European funds had inflows of 6.7t (US$385mn, 0.4%)
  • Funds listed in Asia had outflows of 9.9t (-US$589mn, -7.0%)
  • Other regions had modest inflows of 0.5t (US$27mn, 0.8%).

Individual flows (January)

SPDR® Gold Shares and iShares Gold Trust Micro in the US and Xtrackers Physical Gold in Germany drove inflows, partially offset by outflows from Invesco Physical Gold in the UK and Bosera Gold Exchange in China 

  • In North America, SPDR® Gold Shares had inflows of 42.1t (US$2.5bn, 4.4%), while iShares Gold Trust Micro gained 5.3t (US$311mn, 35.7%)
  • In Europe, Xtrackers Physical Gold had inflows of 4.3t (US$251mn, 9.7%), while Invesco Physical Gold lost 4.6t (-US$266mn, -1.9%)
  • In Asia, Chinese ETFs Bosera Gold Exchange, E Fund Gold, and Huaan Yifu Gold had outflows of 2.9t (-US$173mn, -12.1%), 2.8t (-US$164mn, -19.8%), and 2.8t (-US$162mn, -8.6%), respectively. 

Long-term trends

Gold ETFs reversed course in January with inflows into large North American and European ETFs while Asian funds experienced some outflows 

  • In 2021, gold ETFs saw global outflows of US$9.1bn (-173t) as large North American funds lost assets in line with lower gold prices, while low-cost8  funds and all other regions remained mostly positive
  • Conversely, this year has been marked with strong inflows into large US funds, in addition to continued growth in European ETFs. On the other hand, Asian gold ETFs have experienced outflows of nearly US$600mn (-7.0%), compared to inflows of close to US$1.5bn (20.4%) last year 
  • After growing by 45% (US$3.7bn, 63t) in 2021 with consistent inflows independent of gold price behaviour, low-cost ETFs remained positive adding US$548mn (9.4t, 4.6%) last month. 

Footnotes

  1. Options expiry: While many ETFs have weekly or end-of-month option expirations, we refer to regular monthly expiration of ETF options that occur on the third Friday of each month, which generally have the most significant open interest. When gold prices rally into a major options expiration, it often elicits additional call options to be exercised creating primary activity in the ETFs.

  2. Based on the LBMA Gold Price PM as of 21 January 2022.

  3. Based on India 10-year Government Bond yield as of 31 January 2022.

  4. ‘Other’ regions include Australia, South Africa, Turkey, Saudi Arabia, and the United Arab Emirates.

  5. Based on the LBMA Gold Price PM as of 31 January 2022.

  6. As of 4 February 2022, based on available data.

  7. We calculate gold-backed ETF flows both in ounces/tonnes of gold and in US dollars because these two metrics are relevant in understanding funds’ performance. The change in tonnes gives a direct measure of how holdings evolve, while the dollar value of flows is a finance-industry standard that gives a perspective on how much investment reaches the funds. We have made a few adjustments and improvements to our calculation methodology as of 1 July 2021 that will impact historical and future data. Specifically, we revised the methodology used to estimate changes in gold holdings as described below:

    • 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.

  8. Low-cost US-based gold-backed ETFs are defined by the World Gold Council as exchange-traded open-ended funds listed in the US and Europe, backed by physical gold, with annual management fees and other expenses like FX costs of 20bps or less. At present, these include Aberdeen Physical Swiss Gold Shares, SPDR® Gold MiniShares, Graniteshares Gold Trust, Goldman Sachs Physical Gold ETF, iShares Gold Trust Micro, CI Gold Bullion Fund, WisdomTree Core Physical Gold, and Xtrackers IE Physical Gold ETC.