World Gold Council reports slowdown in gold ETF inflows

Aug 3rd, 2018 | By | Category: Commodities

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Gold-backed ETFs (including ETPs) recorded 33.8 tonnes of net inflows globally during Q2 2018, down 46% from 62.5t over the same period last year, according to the World Gold Council.

World Gold Council reports slowdown in gold ETF inflows

Slower inflows into gold ETFs were the main contributing factor to global gold demand in H1 coming in at its lowest level since 2009, reports the World Gold Council.

The slowdown brings net inflows into gold-backed ETFs for the first half of the year to 63t, the lowest since H1 2015, despite mounting global trade tensions and relatively volatile stock markets.

At the end of H1, gold holdings of gold-backed ETFs stood at 2,434t globally.

The industry organisation notes that slower inflows into gold ETFs were the main contributing factor to global gold demand in H1 coming in at its lowest since 2009.

While the global slowdown was evident, there were significant regional differences in demand. European-listed products saw decent demand, absorbing 83% (53.2t) of total H1 inflows, which the WGC believe stems from uncertainty surrounding Italian elections and the eurozone’s monetary policy outlook.

By contrast, holdings of North American-listed products fell by 30.6t as investors focused on domestic economic strength.

The differences in regional flows for Q2 represents something of a reversal compared to Q1 2018. The WGC reports that geopolitical concerns earlier in the year (primarily surrounding tensions with North Korea) together with a weakening of the US dollar, made US investors skittish, driving investment into gold-backed ETFs.

Around mid-April, these issues began to subside and the US economy showed continued improvement, taking the momentum out of US inflows. At the same time, Europe saw political instability escalate, and this, in conjunction with a marked depreciation of the euro, encouraged a flight to safety in European-listed gold-backed ETFs.

As of the end of Q2 2018, European products reached 1,052t while North American funds were little changed year-to-date with holdings of 1,248t.

Asian gold ETFs saw an impressive 16.7t of inflows in Q2, taking year-to-date inflows to 10.8t. China’s Bosera Fund’s gold ETF continued to grow, aided in part by the unwinding of Bosera’s unlisted funds (I and D Shares), and has leapfrogged Huaan Yifu to become China’s largest gold-backed ETF with holdings of 30.9t (as at end Q2).

Holdings in Asian-listed gold ETFs as a group have grown 13% year-to-date to total holdings of 95t, primarily due to growth in China.

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