Gold ETF inflows continue in July, reports World Gold Council

Aug 13th, 2019 | By | Category: Commodities

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Global gold-backed ETFs (and ETPs) recorded $2.6 billion net inflows in July, swelling their collective gold holdings by 52 tonnes to 2,600t, a level not seen since March 2013, according to World Gold Council.

Gold ETF inflows continue in July, reports World Gold Council

Investors continued their net buying of gold ETFs in July, following a trend that started in mid-May.

Combined with an increase in the gold price of 1.3% in July, assets under management across all global gold-backed ETFs rose 3.4% to end the month at $119bn.

Last month’s flows continued the positive trend that started in mid-May as investors sought to boost allocations to gold in order to buffer portfolios against economic concerns, trade tensions, and geopolitical risks.

Moreover, global monetary policy has shifted to a more accommodative stance with the market predicting the Federal Reserve to cut rates two more times by the end of the year.

Looser monetary policy tends to lower interest rates, boost inflation, and weaken the US dollar, all of which are supportive of gold.

Flows

North America dominated gold ETF flows in July, adding 43t ($2.0bn, 3.4% of AUM) to the region’s collective holdings.

The largest gold ETFs led the way with the SPDR Gold Shares (GLD US) and iShares Gold Trust (IAU US) together accounting for 75% of net global inflows. GLD increased its holdings by 29t ($1.4bn, 3.8%), while IAU added 13t ($605 million, 4.5%).

Low-cost gold ETFs – those with expense ratios of 20 basis points or less – also recorded significant demand, accumulating 2.4t ($112m, 5%) during the month and bringing their joint holdings to an all-time high of 56t ($2.6bn).

In Europe, gold ETFs brought in 7.5t ($483m, 0.9%) with net inflows spread across countries in the region.

While flows in July were just a fraction of those in June, gold ETFs in Europe have seen net positive flows in every month this year, apart from April. World Gold Council attributes the ongoing support for gold ETFs in the continent to looming concerns over Brexit, weaker currencies, negative interest rates, as well as other idiosyncratic risks.

Turning to Asia, gold ETFs recorded positive net inflows of 0.8t ($37m, 1.1%). China-listed gold funds saw a significant net increase in holdings as investors reacted to a sizable gold price increase in renminbi terms.

Other regions had inflows of 0.9t ($41m, 2.8%).

Long-term trends

Global gold-backed ETFs have added 159t ($7.6bn, 6.4%) year-to-date, mostly driven by strong inflows in January, June, and July.

Strong inflows in North American-listed funds over the past two months have increased the regions’ contribution to 2019 growth – YTD, North America has added 73.5t compared to 94.6t in Europe.

Low-cost gold ETFs in the US have seen positive flows for 13 of the past 14 months and have increased their collective AUM by 54% so far this year.

UK-based gold ETF holdings are at all-time highs, reaching 556t or 21% of global gold-backed ETF assets at the end of July.

Asian-listed funds have seen net outflows equivalent to more than 10% of AUM on the back of an appetite for stocks and profit-taking in gold earlier in the year. This trend has begun to shift in the past two months.

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