Gold ETF Flows: July 2024

Highlights

• Global gold ETFs experienced their strongest month since April 2022, attracting US$3.7bn in July, the third consecutive monthly inflow; all regions saw inflows with Western funds leading the way
• Recent inflows and the rising gold price pushed global gold ETFs’ total AUM to US$246bn, a month-end peak. Collective holdings rebounded to 3,154t, the highest since January
• Trading volumes rose across the board in July with exchange-traded derivatives leading the rebound, while growing prospects of rate cuts from major central banks pushed up COMEX gold future net longs to a multi-year month-end high. 

July in review

Global physically-backed gold ETFs ¹ have now seen inflows three months in a row, adding US$3.7bn in July.² Notably, all regions reported positive flows this month with Western gold ETFs contributing the most. A combination of the July inflow and a 4% rise in the gold price pushed total global assets under management (AUM) 6% higher to US$246bn, a new month-end record.³ Collective holdings concluded July with a 48t increase, reaching 3,154t. 

Successive inflows over recent months have narrowed the y-t-d loss in global gold ETFs to US$3bn. And while collective holdings have fallen by 72t (-2%) so far in 2024, their total AUM rose by 15%, supported by a 17% increase in the gold price. European and North American funds remain on the red for the year despite the change in trend while Asia has recorded sizable inflows.

Regional overview

North American funds saw inflows of US$2bn, more than reversing minor outflows from May and June. July was unprecedented in the political front with the assassination attempt on Trump followed by Biden stepping down from the presidential race.⁴ Gold ETF saw inflows around both dates, pointing to increased safe-haven demand. Meanwhile, falling inflation, the cooling labour market and the US Fed Chair Powell’s note that a cut in September is “on the table” during the recent meeting intensified investor expectation of easing soon.⁵ In turn, US Treasury yields fell and the dollar weakened, pushing the gold price to a record high during the month and spurring investor interest in gold ETFs. Furthermore, we believe equity market volatilities, especially during the second half of July, also supported gold ETF demand. 

So far in 2024 North American outflows have amounted to US$2.9bn and collective holdings have fallen by 52t, second only to European losses. Nonetheless, driven by recent inflows and the notable gold price strength, the total AUM of North American funds has risen by 14% y-t-d. 

Europe has now recorded inflows over three successive months, attracting US$1.2bn in July, the strongest since March 2022. The UK and Switzerland led inflows. A common backdrop across the region in July has been declining government bond yields. Although the European Central Bank left rates unchanged at their July meeting, Lagarde’s comment that the September decision is “wide open” intensified investor expectation for another cut in the near future.⁶  Meanwhile, investors had expected the Bank of England to start its easing cycle on 1 August – and it lived up to the market consensus, cutting 25bps, the first time in four years.⁷ In addition, a commitment to address fiscal challenges from the new UK Chancellor, Rachel Reeves, helped restore some confidence in public finances and contributed to a lowering of UK gilt yields.  And as the opportunity cost of holding gold fell, investor interest in gold ETFs rose in the region – further boosted by a record-setting gold price. 

Recent inflows have narrowed the European y-t-d losses to US$3.7bn and trimmed the decline in holdings to 66t. Similar to North America, a higher gold price, alongside recent positive demand, lifted the total AUM of the region’s funds to US$103bn, a 12% rise. 

Asia extended its inflow streak to 17 months, attracting US$438mn in July. India led inflows. Strong Indian demand was mainly aided by changes announced in the recent budget which effectively shortens the long term investment qualifying time period and lowered the associated tax rate which makes the investment landscape for gold ETFs more equitable and attractive. A strong gold price in the local currency also helped. Net inflows were also observed in China and Japan – likely driven by similar factors namely equity market weaknesses and strong local gold price performances in the month. 

Despite July’s slowdown, Asia has registered inflows of US$3.6bn y-t-d, significantly outpacing all other markets, driven mainly by China and Japan. Supported by record-breaking inflows and a higher gold price, the total AUM of Asian funds reached US$15bn, the highest ever, while collective holdings increased by 47t. 

In other regions, July marks a second consecutive month of mild inflows, mainly from South Africa where post-election political uncertainties may have helped.⁹ Australia also experienced positive flows, likely fuelled by a strong gold price performance in the depreciating local currency. So far in 2024 funds listed in other regions saw inflows of US$40mn, due mainly to South Africa.