Gold ETF Flows: March, 2022

Gold ETF assets surge to near record highs in March

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March and Q1 highlights

Global gold ETFs had net inflows of 187.3t (US$11.8bn, 5.3% of AUM) in March, with assets just below the record of US$240.3bn, set in August 2020.1 March inflows were the strongest since February 2016, despite a significant rebound in equities and a strong US dollar performance. There were positive flows across all regions during the month, but most came from North American and European gold ETFs. March demand brought Q1 inflows to 269t (US$17bn) –the highest quarterly inflows since Q3 2020, as global equities had their worst quarterly performance since Q1 2020.2 

 

ETF flows chart

Data as of

Sources: Bloomberg, Company Filings, ICE Benchmark Administration, World Gold Council; Disclaimer

Gold reached US$2,069 on 8 March,3 just shy of its all-time high as the conflict in Ukraine escalated, and sanctions on Russian fuelled stagflation fears.4 The price retreated throughout the month on perceived easing of geopolitical tensions but still finished at US$1,942/oz,5 1.7% higher on the month and 7.6% higher on the quarter.6 The Fed also increased its policy rate by 25bps in March, with dot plots suggesting rate hikes totalling anywhere between 1% and 3% this year, which may include 50bps increases in some meetings. However, despite higher nominal rates, rapidly rising inflation, geopolitics, and market volatility supported gold’s performance. Read more in our Gold Market Commentary, March 2022.

North American inflows of 100.6t (US$6.3bn, 5.5%) were dominated by larger US funds in absolute terms, but nearly all funds in the region grew. Low-cost gold ETFs rebounded strongly during the month to add approximately 13t or US$800mn, as strategic investors increased positions on the back of inflation concerns, the Russian–Ukraine war, and the flattening of the US Treasury yield curve which inverted by the end of the month – a development that has historically preceded recessions.

European funds grew by 82.7t (US$5.2bn, 5.3%). UK funds represented 38% of all global inflows, despite their relatively smaller market share (20% of global AUM). Although they hold fewer assets, funds in France and Ireland grew 11% and 12% respectively. Inflation numbers continue to come in above expectations and just this week German retailers announced food price increases of 20-50% across the board.7 Gold’s attributes as a well-recognised inflation hedge and a store of value, have come to the fore, as we have seen European currencies depreciate against the US dollar in recent months.

Funds in Asia had inflows for the first time this year adding 2.6t (US$166mn) in March, but have still lost 10.5% of assets y-t-d (-14.8t, -US$880mn). Chinese funds have been the primary driver of flows for both the month and the quarter, while there have been almost no flows into Japan despite gold hitting an all-time high in Japanese yen, with gold prices up over 13% in local currency terms. Funds in other regions added 1.4t (US$88.7mn, 2.4%) in March.8

Strong trading volumes and futures demand

Daily trading averages in March shot higher to US$170bn a day, well above the February levels of US$139bn9 and the 2021 average of US$130bn. Net long positioning, via the recent Commitment of Traders (COT) report for COMEX gold futures, initially rose to 1,000t (US$62bn), the highest level since the beginning of the COVID-selloff two years ago, before settling at 865t (US$54bn), slightly lower than where it finished in February.10

Regional flows11

All regions experienced inflows in March 2022, while Asian funds were the only region with outflows in the first quarter

  • North American funds had inflows of 100.6t (US$6.3bn, 5.5%)
  • European funds had inflows of 82.7t (US$5.2bn, 5.3%)
  • Funds listed in Asia had inflows of 2.6t (US$166mn, 2.2%)
  • Funds in other regions added 1.4t (US$89mn, 2.4%).

Individual flows

SPDR® Gold Shares and iShares Gold Trust in the US, and iShares Physical Gold and Invesco Physical Gold in the UK drove inflows

  • In North America, SPDR® Gold Shares had inflows of 62.4t (US$3.9bn, 6.2%), while iShares Gold Trust gained 18.4t (US$1.2bn, 3.8%). In the low-cost space, SPDR® Gold MiniShares Trust added nearly all its yearly inflows during the month (9.3t, US$579mn, 13%), while Aberdeen Gold Trust added 1.6t (US$101mn, 3.8%)
  • In Europe, iShares Physical Gold had inflows of 45t (US$2.9bn, 21%), Invesco Physical Gold added 35.4t (US$2.2bn, 15%) while Xtrackers Physical Gold (EUR) lost 13.1t (-US$819mn, -26%)
  • In Asia, Chinese ETFs Huaan Yifu Gold added 3.0t (US$194mn, 12%), while Bosera Gold Open-ended fund lost 2.5t (US$159mn, 14%).

Long-term trends

Gold ETFs have roared back in 2022 with assets near all-time highs

  • 2022 inflows of US$16.6bn have far surpassed the 2021 outflows of US$9.1bn; current holdings of 3,835t, leave total gold ETF holdings 1.8% away or 73t from the all-time month-end high of 3,909t in October 2020
  • AUM of US$239.7bn is just shy of the August 2020 AUM high of US$240.2bn.
  • 2022 is marked by strong inflows into US funds, in addition to continued growth in European ETFs. Despite double-digit growth in 2021, Asian gold ETFs have experienced outflows of over US$880mn (-10.5%), compared to inflows of close to US$1.5bn (20.4%) last year 
  • After growing by 45% (US$3.7bn, 63t) in 2021 with consistent inflows, low-cost gold ETFs in the US continue to add assets independent of gold price behaviour, adding US$1.46bn (24t, 13.5%) year-to-date. 

Footnotes

  1. Current assets as of 31 March 2022 are 3,836t (US$239.6bn)

  2. The S&P 500 rallied 3.6% in March, but was lower by 5% during the quarter
  3. Based on the LBMA Gold Price PM.
  4. Based on the LBMA Gold Price PM as of 31 March 2022.
  5. Based on the LBMA Gold Price PM as of 31 March 2022.
  6. ‘Other’ regions include Australia, South Africa, Turkey, Saudi Arabia, and the United Arab Emirates.
  7. Daily trading volumes as of January 2022 was previously reported as US$169bn. This was revised lower to US$145bn following a recent methodology update. On Goldhub, see Trading volumes.

  8. As of 28 March 2022, based on available data.
  9. We calculate gold-backed ETF flows both in ounces/tonnes of gold and in US dollars because these two metrics are relevant in understanding funds’ performance. The change in tonnes gives a direct measure of how holdings evolve, while the dollar value of flows is a finance-industry standard that gives a perspective on how much investment reaches the funds. We have made a few adjustments and improvements to our calculation methodology as of 1 July 2021 that will affect historical and future data. Specifically, we revised the methodology used to estimate changes in gold holdings as described below:

    • Previously, changes in tonnes were calculated by converting a fund’s AUM (in USD) into gold holdings (in tonnes) and computing the difference over periods. However, currency movements and large daily and weekly gold price movements could distort the difference between tonnage change and US-dollar fund flows during short time horizons. We therefore adjusted tonnage change as a function of fund flows versus AUM and replaced the tonnage change field with fund flows (tonnes).
    • Now, for most funds, we estimate US-dollar fund flows, as described in section 2.3.2 below, and then convert those flows to fund flows (tonnes). 
    • Fund flows (tonnes) and US-dollar fund flows will now represent a more aligned explanation of investment demand for gold ETFs, while the true holdings of a fund, in US dollars and tonnage, will remain a close estimate, impacted by the currency and price volatility described above.
    • Based on our initial analysis, the changes are not likely to have a material long-term effect on historical information, particularly on a global or regional aggregate basis, but will adjust short-term fluctuations that can sometimes occur due to input data and timing variations.