Gold ETF Flows: January 2023

Gold ETF outflows in Europe and Asia outweighed North American inflows in January

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Highlights

  • Global physically backed gold ETFs saw outflows of US$1.6bn (-26t, -0.8%) in January
  • Inflows into North American funds (US$572mn) and the Other region (US$104mn) were outweighed by European (US$2.1bn) and Asian (US$246mn) outflows
  • Funds listed in the UK and Germany led global outflows.

January highlights

Global physically backed gold ETFs1 kicked off 2023 with net outflows of US$1.6bn in January and a 26t (-0.8%) decline in total holdings to 3,446t.2 While the gold price witnessed its strongest January in a decade, registering a gain of 6.1%,3 gold ETF outflows in Europe and Asia dwarfed positive demand in North America and the Other region.4 Overall, collective gold ETF assets under management (AUM) increased by 5.3% to US$213bn by the end of the month, aided by the gold price increase despite outflows in tonnage terms.

North American funds likely benefited from gold’s strong price performance as the dollar weakened and interest rates stabilised, leading to US$572mn of net inflows (+9t, +0.5%). In addition, positioning in the gold ETF options market may have been another contributor as most inflows occurred around monthly gold ETF options’ expiry date.5 In contrast, European funds saw outflows of US$2.1bn (-33t, -2.1%) in January, extending their losing streak to nine months. Rising rates as European central banks catch up to the Fed,6 currency appreciation and strong local stock market performances may have diverted investors' attention away from gold ETFs. This was particularly evident in the UK (-US$1.3bn, -21t), where gold ETFs accounted for the lion’s share of the region’s negative flows.

In Asia, Chinese funds witnessed outflows of US$200mn (-3t, -6.4%) during January, taking up the bulk of the region’s -US$246mn (-4t, -3.3%) total. The CSI300 stock index’s 7% jump during the month and an appreciating CNY against the USD likely weakened investors’ appetite towards gold. Finally, funds in the Other region registered positive flows of US$104mn (+2t, +2.8%), the largest monthly tonnage increase since January 2021, mainly contributed by Turkey (+US$95mn, 2t).

Market sentiment upbeat amid the gold price rally

Gold’s average daily trading volume across all markets was US$156bn per day in January, a significant rise of 37% from December. The gold price rise during the month may have been a key contributor. Average daily trading volumes of exchange-traded gold derivatives jumped by 58% m-o-m in January, followed by a 26% increase in the OTC market and a 18% rise in gold ETFs. Net longs in gold futures at the COMEX, based on data from the Commitment of Traders report, has risen every week since early December, alongside a rising gold price, new longs and short covering. And there is still room for growth as the current total net longs of 572t are still below their averages in 2020 (647t) and 2021 (866t).7

 

Gold ETF flows

Data as of

Demand captures changes in global/regional gold holdings; fund flows capture the net amount of money (in USD) that comes in or out of gold ETFs globally/regionally. See methodology note.

Regional flows

  • North American funds registered inflows (positive demand) of US$572mn (+9t, +0.5%)
  • European gold ETFs saw outflows (negative demand) of US$2.1bn (-33t, -2.1%)
  • Asian funds witnessed outflows of US$246mn (-4t, -3.3%)
  • The Other region funds experienced inflows of US$104mn (+2t, +2.8%).

Individual flows

UK-listed funds led global outflows, with Invesco Physical Gold ETC losing US$856mn (-14t, -5.6%) and iShares Physical Gold ETC witnessing outflows of US$258mn (-4t, -1.8%)

  • In North America, SPDR® Gold MiniShares Trust attracted inflows of US$386mn (+6t, +7.2%) while iShares Gold Trust saw positive demand of US$183mn (3t, +0.7%)
  • In Europe, German funds also saw large losses: Xtrackers IE Physical Gold ETF witnessed outflows of US$183mn (-3t, -5.1%) and Xtrackers Physical Gold Euro Hedged ETC, -US$151mn (-2t, -6.9%)
  • Asian outflows mainly came from Chinese funds: Huaan Yifu lost US$148mn (-2t, -10%) and Bosera Gold registered a loss of US$40mn (-1t, -5%).

Long-term trends

  • In 2022, global gold ETF holdings fell by 110t (-US$3bn) as funds in North America, Europe and Asia all experienced outflows during the year
  • North American funds saw inflows for the second consecutive month while European gold ETFs extended their losing streak to nine months
  • Low-cost fund holdings registered negative demand in January as European outflows outpaced North American inflows.8

Footnotes

  1. We define gold ETFs as regulated securities that hold gold in physical form. These include open-ended funds traded on regulated exchanges and other regulated products such as close-end funds and mutual funds. A complete list is included on the gold ETF section of Goldhub.com.

  2. We track gold ETF assets in two ways: the quantity of gold they hold, generally measured in tonnes; and the equivalent value of those holdings in US dollars (AUM). We also monitor how these fund assets change through time by looking at two key metrics: demand and fund flows.

    • Gold ETF demand is the change in gold holdings during a given period. We use this metric to calculate the quarterly demand estimates reported in Gold Demand Trends.
    • Fund flows represent the amount of money – reported in US dollars – that investors have put into (or retrieved from) a fund during a given period.

    For more details, see our ETF methodology note.

  3. Based on the LBMA Gold Price PM in US dollars.

  4. The Other regions include Australia, South Africa, Turkey, Saudi Arabia and the United Arab Emirates.

  5. We refer to regular monthly expiration of ETF options that occur on the third Friday of each month. When gold prices rally into a major options expiration, it often elicits additional call options to be exercised creating primary activity in the ETFs.

  6. For more, see: ECB, BOE deliver half-point hikes a day after Fed raises rates

  7. Based on the Commodity Futures Trading Commission data as of 24 January 2023, the latest data available due their release delay. For more, see: Commitments of Traders | CFTC

  8. Low-cost 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.