In the month of June global gold ETFs registered 28t (US$1.7bn) of outflow. This was the second consecutive month of outflows, following the 53t (US$3.1bn) that left these funds in May. While the recent flows were enough to push Q2 into net outflows of 39t (US$2bn), year-to-date net inflows remained positive at 234t (US$14.8bn). Total holdings at the end of June stood at 3,792t (US$221.7bn), up 6% y-t-d. North American and European funds were the only regions to see outflows in June, holdings in Asia rose fractionally. In China, the range-bound gold price and local equity strength discouraged greater levels of gold ETF investment. In India, minor net inflows continued in June, primarily driven by market volatility and a depreciating rupee attracting investment into Indian gold ETFs. Holdings in other region were virtually flat month-on-month.  

H1 highlights

On a y-t-d basis, the picture is one of strength, with all regions except Asia having seen inflows. But it was a tale of two halves. Demand for gold ETFs surged in Q1 to 273t 1 ‘Other’ regions include Australia, South Africa, Turkey, Saudi Arabia, and the United Arab Emirates. – the highest level of quarterly inflows since Q3 2020 – propelled by gold price strength, equity market weakness, rapidly rising inflation expectations, and unexpected geopolitical events. This investment partially reversed in Q2, with outflows of 39t, as interest rate hikes and quantitative tightening came to dominate the narrative. But the fact that only a fraction of the Q1 inflows were unwound is a sign that much of this demand is ‘sticky’, more strategic in nature than tactical in our view. At a regional level, North American and European funds attracted the lion’s share of investment. In H1, US fund holdings rose by 133t (US$8.1bn) and European funds added 119t (US$7.5bn). Funds in ‘other’ regions rose by a marginal 2t. Asia was the only region to see net outflows over the first half of 2022, declining by 16t with Chinese funds the main contributor. While the bulk of Chinese outflows occurred during Q1, impacted by the New Year holiday and tactical trading into a rising gold price, lower gold price volatility and profit-taking led to further outflows in Q2.

Mid-Year Outlook 2022

Investors around the world face a challenging environment during H2 2022, needing to navigate a noxious compound of rising interest rates, high inflation and geopolitical risks. In the near term, the gold price will likely remain sensitive to real rates, the speed at which global central banks tighten monetary policy, and their effectiveness in controlling inflation.

Gold trading volumes and futures demand subdued in June

Average daily trading volumes for gold totalled US$118.2bn in June, below the US$137.3bn average in May. Declines across OTC, exchanges and gold ETFs contributed to the m-o-m fall, although China was a bright spot with higher trading volumes on the Shanghai Gold Exchange and in Chinese gold ETFs in June. The latest Commitment of Traders (COT) report for Comex showed net long positioning declining marginally in June. In the week ending 28 June, net longs totalled 513t (US$30bn), down from 564t (US$33.4bn) at the end of May

Key highlights include:

• Global gold ETFs registered their second consecutive month of outflows (28t, US$1.7bn) in June
• North American and European funds accounted for the outflows, with holdings in Asia and other regions marginally higher
• Global holdings of gold ETFs are up 6% y-t-d

For more log onto www.gold.org.