Gold ETF Flows: September, 2022

More gold ETF outflows in September as gold remained under pressure

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Highlights    

  • Global gold ETFs registered outflows of 95t (US$5bn) in September – the largest monthly outflow since March 2021
  • SPDR® Gold Shares and iShares Gold Trust led global outflows during the month
  • Gold ETFs have given back almost all of the inflows seen through April.

Global gold ETFs posted their fifth consecutive month of net outflows in September as holdings dropped by a further 95t (US$5bn)1.  This is also the largest monthly outflow since March 2021 (107t). Conditions remained challenging for gold throughout the month, owing to the stiff headwinds of continued US dollar strength and higher yields on the back of hawkish actions by the US Fed. For more analysis on the drivers of gold during September, please see our latest Gold Market Commentary.

By the end of September, global gold ETF holdings were 3,548t (US$191bn), a 1% y-t-d decrease in tonnage terms. And the recent freefall in holdings has been stark. In the first four months of the year gold ETFs saw inflows of more than 300t (US$19bn), with demand fuelled by safe-haven flows against a backdrop of heightened economic and geopolitical unrest. Since the end of April, however, global holdings have fallen by virtually the same tonnage amount, with outflows predominately in North American and European funds.
       

September highlights

Outflows were again widespread, the solitary ‘bright’ spot being Asia, where holdings were virtually unchanged m-o-m. North American (-59t, -US$3bn) and European funds (-36t, -US$2bn) accounted for the bulk of the global outflows. The largest and most liquid US funds drove outflows worldwide, as stubbornly high inflation led the Fed to hike interest rates by a further 75bp. UK, German, Swiss and French listed funds were the main contributors to the overall fall in European holdings, encouraged by higher interest rates from the ECB and a GBP crisis triggered by fiscal policy decisions.

In Asia, Indian gold ETF inflows of 0.4t outweighed outflows in Chinese-listed funds (-0.3t). The rapid depreciation of the RMB may have attracted some interest in gold, countering lower local gold price volatility during the month. Finally, South African and Australian funds drove the minor net outflows seen in the other region. 2

 

ETF flows chart

Data as of

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

Gold trading volumes rose in September but positioning remains in the doldrums

Average daily trading volumes rose to US$131bn in September, following the summer lull, which saw August volumes drop to US$107bn/day. The m-o-m increase was more pronounced in exchange-traded derivatives (+29%) and ETFs (+32%), while OTC volumes saw a smaller rise (+19%). Commitment of Traders (COT) reports for COMEX in September show that managed money positioning once again turned net short and became increasingly so as the month drew on. The latest report puts managed money positioning at -128t, the largest net short position for COMEX gold since November 2018, highlighting the negative sentiment towards gold.

Regional flows3 

Outflows in all regions except Asia 

  • North American funds saw outflows of 59t (US$3bn, 3%)
  • European funds fell by 36t (US$2bn, 2%)
  • Funds listed in Asia rose fractionally by 0.1t (US$7mn, 0.1%)
  • Funds in other regions had outflows of 1t (US$51mn, 1%). 

Individual flows (Sept)

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

  • In North America, SPDR® Gold Shares led outflows, with AUM dropping 34t (US$2bn, 3%), while iShares Gold Trust lost 17t (US$904mn, 3%).
  • In Europe, Invesco Physical Gold lost 10t (US$562mn, 4%), Xetra-Gold lost 3t (US$185mn, 1%), and both Xtrackers IE Physical Gold ETC and Xtrackers Physical Gold Euro Hedged ETC lost 3t respectively
  • In Asia, Indian ETFs led inflows with ICICI Prudential Gold iWIN ETF (0.4t, US$26mn, 7%) and China’s E Fund Gold Tradable Open-end Securities Investment Fund registering the biggest gains in assets

Long-term trends

Gold ETFs have given almost all of their inflows seen through April

  • Larger, liquid fund flows continue to move with the price of gold, while low-cost funds continue to grow steadily
  • European investment into gold ETFs has led the way 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 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 here: 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. ‘Other’ regions include Australia, South Africa, Turkey, Saudi Arabia, and the United Arab Emirates.

  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 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 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.