Gold ETF Flows: May 2024

Highlights

• Global gold ETFs saw inflows in May, ending their twelve-month losing streak.
• Europe and Asia led global inflows while North America and other regions registered mild losses. 
• Global gold ETF holdings rose to 3,088t by the month end. Driven by inflows and a higher gold price, total AUM rose to US$234bn, a 2% increase during the month.
• Trading activities across global gold markets fell in May – cooling momentum at the Shanghai Futures Exchange and major ETF markets contributed to the decline. Meanwhile, OTC trading volumes fell only mildly.

May in review

Physically backed gold ETFs¹  saw their first monthly inflow since last May, amounting to US$529mn².  A stronger gold price (+2%) and inflows pushed gold ETFs’ total assets under management (AUM) 2% higher to US$234bn, the highest since April 2022. And with improved gold ETF demand in May, collective holdings rebounded to 3,088t, but remaining -8.2% below the 2023 average (3,363t).

European and Asian funds drove global inflows. While May marks Asia’s 15th consecutive monthly inflow, Europe recorded their first positive flow since last May. Meanwhile, North American fund flows turned negative again, albeit only slightly. 

May regional overview

Flows in North America flipped back to negative in May (-US$139mn) following two consecutive monthly inflows. But compared to the region’s outflows in prior months the negative May figure was the smallest since December 2019. The gold price rally leading up to the expiry date of major gold ETF options triggered exercises of in-the-money (ITM) calls linked to derivatives strategies, resulting in net share creations and bringing sizable inflows. Investor interest appeared to be drawn to spikes in geopolitical risks as sporadic gold ETF inflows coincided with upticks in the Geopolitical Risk Index. During the remainder of the month gold ETF flows fluctuated with the gold price; for instance, hawkish Fed minutes from its latest meeting weighed on the gold price towards the end of May, leading to outflows in the region. Furthermore, the rallying equity market may also have diverted investor attention away from gold. 

May widened North America’s y-t-d outflows to US$4.3bn, second only to Europe, mainly from large funds during January and February. But thanks to the gold price strength, the region’s total AUM climbed further to US$119bn. Meanwhile, collective holdings fell to 1,573t, -8% below the 2023 average of 1,701t. 

Europe experienced inflows in May (+US$287mn), putting a stop to its twelve-month losing streak. The region experienced a tale of two policies. Inflows were mainly driven by expectations that the ECB would cut rates in early June, as primarily reflected in Swiss and German funds: May marks the second occasion this year that Germany has experienced inflows, and the first time Switzerland has recorded inflows since July 2023. However, an earlier-than-expected UK election paired with stickier-than-anticipated inflation pushed back investor expectations for rate cuts by the Bank of England. As a result, UK-listed funds dominated outflows (-US$150mn) over the course of the month. 

In addition, the strengthening Euro against the dollar also led to positive flows of FX-hedged funds, primarily from Switzerland.

May narrowed European funds’ y-t-d outflows to US$6.3bn, mainly from Germany and the UK, despite recent improvements. The region’s collective holdings rebounded and total AUM rose to a 12-month peak, 6% higher than the end-2023 level.

Asia registered its 15th consecutive monthly inflow, capturing US$398mn in May. Although this marks the region’s smallest inflow since November 2023, Asia’s continued inflow streak is the second longest on record.³ China once again drove regional demand, capturing US$253mn. Key drivers of gold ETF demand in the country were the local gold price rise, which refreshed its all-time high, and continued weakness in the local currency. Japan also saw healthy inflows amid attractive local gold price gains. Asia has attracted US$2.6bn so far in 2024; the only region that has captured inflows. AUM in Asian funds have risen by 41% this year – the highest in history – with China as the main contributor and Japan witnessing robust inflows. 

Funds listed in other regions once again experienced minor outflows (-US$18mn) as Turkish losses offset South African gains. Y-t-d, outflows from other regions have totalled -US$75mn, mainly from Australian and Turkish funds.