The World Gold Council recently observed in a Gold ETF commentary for the November highlights that global physically backed gold ETFs suffered a tiny outflow of US$920mn in the month, much less than the previous month. Holdings fell to 3,236t, a 9t decrease from November, although overall Assets under management (AUM) increased by 2% to US$212bn, aided by a significant 2% jump in the gold price.
On the regional front, North American funds received net inflows of $659 million in November, snapping the region’s five-month losing trend. During the month, the US Fed held rates steady for the second time in a row, bringing investors’ expectations for the tightening cycle to a close. Such apprehension was heightened by slowing inflation and a cooling labor market, which weighed on US Treasury yields and the dollar even more.
However, the majority of the support for both the price and ETF flows came from early-month geopolitical risk and investor positioning. The gold price surge ahead of the expiry date of large gold ETF options on November 17 also resulted in significant inflows. In contrast, Europe had outflows for the sixth consecutive month, losing roughly $2 billion in November.
With the region’s yields continuing at decade highs, European investors’ interest for gold ETFs has remained muted.5 Meanwhile, investors’ interests were dampened by the strengthening of local currencies, which translated into lower local gold price performances relative to their USD peers.
FXhedged products, primarily from Switzerland, generated inflows, somewhat offsetting November’s losses. Funds listed in Germany experienced the most outflows in the area during the month. In November, Asian funds continued to curb inflows (+US$47mn), albeit only slightly. Inflows from India and Japan outnumbered outflows from China. The Other area experienced minor outflows (-US$21 million), primarily from Australian and South African funds.