Gold ETF Flows: October 2024

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.