April regional overview
North American funds, particularly in the US, represented nearly all the global outflows as the region lost 28.4t (-US$1.6bn, -1.6%). In contrast, European funds saw inflows of 10.6t (US$514mn, 0.6%), from funds across France, Switzerland, and the UK. Funds in 'Other' regions also experienced net inflows but they were considerably smaller in magnitude.3 Asian-listed funds reversed their 2021 strength with very minor outflows of 0.5t (-US$13mn) led by China, which lost 2.0t (-US$111mn, -2.8%). However, funds in India continued to grow, adding 1.3t (US$84mn, 4.4%) during the month.
Low-cost gold ETF segment continues to grow 4
We continue to see strong inflows into low-cost ETFs across the globe, most recently evidenced by 1.7t (US$93mn, 473%) into WisdomTree Core Physical Gold in London and 1.3t (US$74mn, 1.9%) into SPDR® Gold MiniShares during in April. In addition, late last month, there were inflows of approximately 27.5t or US$1.6bn into three low-cost Xtrackers funds, which coincided with equivalent outflows from three of their higher-fee funds, which may indicate a transfer to the newer structures.
Price performance and trading volumes
Gold finished the month 4.5% higher at US$1,768.1/oz, flirting but failing to break through resistance at US$1,800/oz during the second half of April.5 Gold remains 6.5% lower during the year, while its implied price volatility continues to fall and is back to the early 2020 pre-COVID levels of 14%.6 This is well below gold’s realised volatility levels of 20% last year and lower than its historical 20-year realised volatility of 16%.
Gold daily trading averages fell significantly for a second straight month, averaging US$138bn per day during April. This is 25% below the 2020 average of US$183bn, more in-line with the 2019 average of US$146bn. The decrease in April was largely a function of lower COMEX futures volumes reported through the LBMA Trade Data. Net long positioning, via the recent Commitment of Traders (COT) report for gold COMEX futures, ticked higher to 540t,7 well below the 2020 average net long level of 871t.8
Our short-term price-performance model suggests that the primary driver of gold’s recovery during April was a weaker US dollar, alongside declining interest rates, impacting the opportunity cost of holding gold as sensitivity to these variables remains elevated.9 We also believe the recent strength in gold was a function of:
- The weaker US dollar
- Gold prices catching up to other commodities ‘reflation’ strength1011
- Increased fiscal stimulus and continued central bank support
For more details see Gold Market Commentary, April 2021.
US funds continue to weigh on global gold ETF demand
- North American funds had outflows of 28.4t (-US$1.6bn, -1.6%)
- Holdings in European funds rose by 10.6t (US$514mn, 0.6%)
- Funds listed in Asia had net outflows of 0.5t (-US$13mn)
- Other regions had minor inflows.
SPDR® Gold Shares (US) led global outflows in April, followed by iShares Gold Trust
- In North America, SPDR® Gold Shares lost 20.4t (-US$1.1bn, -2.0%), followed by iShares Gold Trust, which lost 8.2t (-US$458mn, -1.7%). SPDR® Gold MiniShares had holdings rise by 1.3t (US$74mn, 1.9%), while Graniteshares Gold Trust added 0.5t (US$30.3mn, -4.2%)
- In Europe13, Amundi Physical Gold added 3.7t (US$217mn, 7.3%), while iShares Physical Gold added 1.9t (US$124mn, 1.0%). WisdomTree Physical Gold lost 3.4t (-US$190mn, -3.1%)
- In Asia, two Indian funds ICICI Prudential Gold and Nippon India combined to add 1t (US$60mn), while Huaan Yifu Gold lost 1.5t (-US$81mn, -4.7%.
Global AUM has fallen over 20% since the August 2020 high
- The downward trend in overall global flows continues to be dominated by US funds
- Gold ETF flows have been largely correlated with gold prices and interest rates in recent months, but have yet to ‘catch up’ to gold strong April performance
- Asian gold ETF holdings continue to grow assets despite other regions faltering.