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In 2021, the 56% y-o-y rise in China’s gold consumption marked a strong comeback from 2020.
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.
Annual demand recovered across virtually all sectors – the notable exception being ETFs, which saw net annual outflows
Gold may face similar dynamics in 2022 than those from last year as competing forces support and curtail its performance.
Physically backed gold ETFs saw global outflows of 173 tonnes (t) (-US$9.1bn, -4.0% AUM) in 2021. Collective gold holdings were down 5% to 3,570t for the year, while assets under management (AUM) in value terms dropped 9% to US$209bn as net outflows were compounded by a 4% contraction in the gold price. Despite considerable outflows for the year, gold ETF holdings remain significantly above pre-pandemic levels, as they posted record inflows of approximately 875t (US$48bn) during 2020.
The shift to risker and less liquid assets strengthens the case for an allocation to gold, given its unique combination as a highly liquid, low-volatility asset.
Gold rose 2% in November based on the LBMA reference price, rallying early in the month before giving up most of those gains in the following weeks.
Gold rose slightly in October, despite a risk-on environment and increases in short-term bond yields
Gold-backed ETFs (gold ETFs) experienced net outflows of 25.5 tonnes (t) (-US$1.4bn, -0.7% AUM) in October. Outflows of near equal magnitude from Europe and North America were marginally offset by inflows in Asia.