Physically-backed gold ETFs saw net outflows of US$2.3bn in July, equivalent to a 34t reduction in holdings. Despite this, total assets under management (AUM) increased by 2% m/m to US$215bn as a rebound in gold price more than offset negative flows.
August has been a good month for gold returns over the past two decades, likely driven by seasonally weak bond yields and consumer sentiment, anticipation of seasonal equity volatility in September, and some gold restocking in India and China.
India is one of the world’s largest gold bar and coin markets. Investment demand for gold is driven by its safe-haven appeal and the ability to convert these products into jewellery at a later stage.
Gold, in Australian dollars (AUD), delivered positive returns in 2022 and this has continued so far in 2023. It has attracted attention: not only have global central banks continued to buy gold, but Australia’s sovereign wealth fund has also added gold to its portfolio.
Global gold ETFs experienced net outflows of US$3.7bn (56t) in June, calling a halt to their three-month inflow streak. June’s outflow caused global gold ETF demand during H1 2023 to turn negative, leaving collective holdings of global gold ETFs at US$211bn (3,422t).
Gold in US$/oz returned just 0.1% in April, consolidating after a strong run up during Q1. Support for gold came from lower rates and positive ETF flows while lower inflation expectations and profit taking created a drag.
Cracks from unprecedented rate hikes are beginning to show, with US small banks and real estate sectors at the epicentre. Gold’s case just got stronger.