Gold ETF Flows: March 2023

The banking crisis fuelled gold ETF inflows in March

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Highlights

  • March saw gold ETFs net inflows of US$1.9bn (+32t) for the first time in ten months, but this was not enough to prevent the net quarterly outflows of US$1.5bn (-29t)
  • European funds led inflows in March (+US927mn, +18t); however, on a quarterly basis Europe (-US$2.4bn, -40t) also accounted for the bulk of global outflows
  • In Q1, North America (+US829mn, +10t) and the Other region (+US124mn, +2t) saw net inflows while Asia (-US46mn, -1t) experienced mild outflows.

March and Q1 highlights

Lower yields, a weaker dollar and safe-haven buying lifted the gold price in March by 9%,1 fuelled by the recent banking industry crisis. This was a key contributor to net inflows into physically-backed gold ETFs2 during March as investors flocked to gold in bulk after 12 March, following the collapse of the Silicon Valley Bank. Global gold ETFs, led by European funds, saw US$1.9bn (+32t, +0.9%) net inflows in March, putting a stop to their nine-month losing streak.

Overall, global gold ETF total assets under management (AUM) rose by 10%, aided by both inflows and the gold price appreciation, to US$220bn by the end of March. Gold holdings increased by 32t to 3,444t.3  However, March inflows were not enough to reverse negative flows in January and February, resulting in a net outflow of US$1.5bn during the first quarter of 2023.

Regional highlights

The majority of Q1 outflows came from European gold ETFs. While Asia saw mild outflows, North America and the Other region witnessed inflows during the first quarter of 2023.

After ten consecutive monthly outflows, Europe finally saw positive flows in March, with UK funds accounting for the lion’s share. Poor stock market performance, systemic risk fears from the banking crisis and the 6% gold price rise in euro helped gold ETF demand in the month. But in Q1, European gold ETF flows remained negative. The majority came from funds listed in the UK, Germany and Switzerland. Continued large rate hikes from the European Central Bank during the quarter may have deterred gold ETF investors.

North American funds captured a net inflow of US$806mn (+12t, +0.7%) in March. The strength in the gold price improved gold ETFs’ attractiveness. Over the first quarter, North American funds saw the largest regional inflow. Gold ETF flows in the region matched the gold price trend: while gold price weakness led to outflows in February, notable price rises attracted inflows during January and March.

Asian fund inflows totalled US$203mn (+3t, +2.9%) in March, mainly driven by Chinese gold ETFs as domestic equities fell and the local gold price surged. China (-US$16mn, -1t) also accounted for the bulk of the region’s quarterly outflows as local investors’ risk appetite improved amid recovering hopes early Q1.

In the Other region4, gold ETFs saw a US$63mn (-1t, -1.8%) outflow in March as Turkey inflows were outweighed by negative flows elsewhere. Turkey (+US$217mn, +4t) was the largest source of the Other region’s Q1 inflows. Rampant inflation, the weakening lira and a 10% surge in the local gold price may have boosted gold ETF demand in Turkey.

Trading volumes surged amid the gold price rally

Global gold market daily trading volume averaged US$183bn in March, surging by 25% m-o-m and the highest in a year. This was 39% above the 2022 average (US$132bn). All markets were active. The daily volume on physical gold markets increased by 7% m-o-m whilst trading activities of exchange-traded gold derivatives and gold ETFs rocketed by 57% and 51% respectively.

During the first quarter, the gold market sentiment was upbeat. Global gold trading volumes averaged US$163bn per day in Q1 2023, a notable rise of 34% from the previous quarter. Similar to March, all gold markets saw improved trading activities in Q1 compared to Q4 2022.

March saw a sizable rebound in COMEX gold futures’ net longs, as the gold price showed strength. Total net longs amounted to 622t by the end of the month, surpassing the 2022 average of 527t. But they remain below their 2021 (654t) and 2020 (871t) average levels.

 

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.

Regional flows

  • North American gold ETFs saw inflows (positive demand) of US$806mn (+12t, +0.7%)
  • European funds had inflows of US$927mn (+18t, +1.2%)
  • Asian funds saw inflows of US$203mn (+3t, +2.9%)
  • The Other region funds saw outflows (negative demand) of US$63mn (-1t, -1.8%).

Individual flows

  • In North America, SPDR® Gold Shares (+US$855mn, +13t) led the region’s inflows while iShares Gold Trust Micro saw the region’s largest outflow of US$73mn (-1t, -7.2%)
  • In Europe, UK funds led both global inflows and outflows: while iShares Physical Gold ETC saw inflows of US$1.1bn (+18t, +7.8%), Wisdom Tree Physical Swiss Gold had an outflow of US$175mn (-3t, -6.3%)
  • In Asia, Huaan Yifu Gold ETF saw inflows of US$144mn (+2t, +11%), dominating the region’s inflows
  • In the Other region, NewGold Issuer Ltd saw the largest outflow of US$57mn (-1t, -5.7%) while the Istanbul Gold Exchange Traded Fund (+US$40mn, +1t) continued to see inflows.

Long-term trends

  • By the end of March, global gold ETFs' total AUM reached the highest in eight months, helped by recent inflows and the rising gold price
  • Current AUM is 9% lower than the March 2022 record high of US$241bn
  • Q1 2023 marks global gold ETFs’ fourth consecutive quarter of negative demand and net outflows
  • Similar to the overall trend, low-cost funds also witnessed their first net inflow in ten months, mainly contributed by European funds.5

Footnotes

  1. Based on the LBMA Gold Price PM in US dollars.

  2. 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 on the gold ETF section of Goldhub.com.

  3. 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.

    • 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 ETF methodology note.

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

  5. Low-cost 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.