Gold ETF Flows: August, 2022

Gold ETF outflows continue for a fourth straight month on dollar strength

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Highlights

  • Global gold ETFs registered outflows of 51t (US$2.9bn, 1.4%) in August
  • SPDR® Gold Shares and iShares Gold Trust led global outflows during the month
  • Gold ETFs have given back two-thirds of their inflows seen through April, standing just 3.6% higher on the year

August highlights

Global gold ETFs registered outflows of 51t (US$2.9bn, 1.4%) in August, in line with price performance.1 This was the fourth consecutive month of outflows. Funds have now given back two-thirds of the inflows accumulated through April; y-t-d global inflows are 102t (US$7.5bn), with total holdings at 3,651t (US$202bn), up 3.6% on the year. A fresh two-decade high in the US dollar - coupled with higher rates - was again, a headwind for the gold price. Gold failed to break through the US$1,800/oz resistance level before succumbing to the pressure following stern hawkish warnings from the Fed. Gold finished the month down 2% to US$1,716/oz, and is lower by 5% on the year. For additional information please review our August Global Market Commentary.

Outflows were widespread in August, with only the ‘Other’ region seeing inflows. North American funds led outflows, falling 40t (US$2.2bn, 2.1%), driven by the largest and most liquid US funds. Continued hawkish commentary from US Fed officials drove 2-yr rates above the June highs, to levels last seen during the Global Financial Crisis (GFC). Nearly all funds in the region experienced outflows, including those in the low-cost space.2

European funds had modest outflows of 4.7t (US$266mn, 0.3%), led by UK- and Swiss-based funds. Europe had considerable equity weakness during the month, and the euro broke parity versus the dollar for the first time since 2002. Volatility in Asian gold ETF flows continued as holdings fell (7.5t, -US$433mn, 6.0%) after rebounding the previous month. Chinese funds dominated outflows in August and remains the country with the most outflows this year. Indian gold ETFs witnessed minor net outflows during the month (0.1t), as investors rotated into other asset classes like equities (BSE Sensex, +3.6%) and bonds (Indian 10-year government bonds, +1.2%).

 

ETF flows chart

Data as of

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

Gold trading volumes and futures demand cratered in August

Gold average daily trading volumes fell significantly in August – as is common in the summer months - to US$109bn, below 2021’s average level of US$131bn. Futures exchange volumes were the primary culprit, as their volumes fell 57% m-o-m. The latest Commitment of Traders (COT) report for Comex continues to show low net long positioning, but the managed money net longs did increase from a July net short position to +94t.

Regional flows3

Outflows in all regions except ‘Other’, as Asian fund flows remain volatile

  • North American funds saw outflows of 39.9t (US$2.2bn, 2.1%)
  • European funds fell by 4.7t (US$266mn, 0.3%)
  • Funds listed in Asia lost 7.5t (US$433mn, 5.6%)
  • Funds in other regions had inflows of 1.2t (US$71mn, 2.1%).4

Individual flows (August)

SPDR® Gold Shares and iShares Gold Trust led global outflows during August

  • In North America, SPDR® Gold Shares led outflows, with AUM dropping 32.5t (US$1.8bn, -3%), while iShares Gold Trust lost 5.1t (US$288mn, -1%).
  • In Europe, WisdomTree Core Physical Gold lost 1.9t (US$111mn, 17%) and Invesco Physical Gold lost 0.8t (US$48mn, 0.3%). Xtrackers Physical Gold EUR added 0.6t (US$36mn, 1.7%)
  • In Asia, Chinese ETFs led outflows as Huaan Yifu (3.8t, -US$219mn, 13%) and Bosera Exchange Traded (2.0t, US$112mn, 10%) had double-digit percentage losses

Long-term trends

Gold ETFs have given back two-thirds of their inflows seen through April, standing just 3.6% higher on the year

  • Larger, liquid funds’ flows continue to move with the price of gold, while low-cost funds continue to grow steadily
  • European inflows have more than doubled those of North American ones in 2022
  • The quantity of global gold ETFs have grown 10% this year.

Footnotes

  1. 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 August 2021 that will impact 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 brief 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).

  2. Low-cost US-based gold-backed ETFs are defined by the World Gold Council as exchange-traded open-ended funds listed in the US and Europe, backed by physical gold, with annual management fees and other expenses like FX costs of 20bps or less. At present, these include Aberdeen Physical Swiss Gold Shares, SPDR® Gold MiniShares, Graniteshares Gold Trust, Goldman Sachs Physical Gold ETF, iShares Gold Trust Micro, CI Gold Bullion Fund, WisdomTree Core Physical Gold, and Xtrackers IE Physical Gold ETC.

  3. 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 impact 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.
  4. ‘Other’ regions include Australia, South Africa, Turkey, Saudi Arabia, and the United Arab Emirates.