Inflows into gold-backed exchange-traded funds (ETFs) turned positive for the year to date thanks to robust investor activity in May, the World Gold Council (WGC) has said.
These investment vehicles recorded net inflows of 19.3 tonnes in May, the third monthly increase in a row. The total value of inflows stood at $1.66 billion.
As a consequence, net inflows in the first five months of 2023 totalled $1 billion while holdings rose by 6 tonnes.
Up And Down
Commenting on May’s increase the WGC said that “strong price momentum earlier in the month incited investors’ interests in gold ETFs before giving some back towards the end of May as the gold price pulled back.”
The body added that “US debt ceiling negotiations and looming banking industry concerns also led investors to seek safe-haven assets, contributing to the positive trend in May.”
Global funds held a total of 3,478.3 tonnes of bullion as of the end of last month, WGC data shows. Total assets under management, however, dropped 0.4% from April to $220 billion. This was due to a fall in gold prices over the course of the month.
North America Drives Inflows
The WGC said that “almost all regions saw positive tonnage demand in May except for Europe.” Global inflows were again led by buoyant buyer interest in North America.
North American funds recorded net inflows worth $1.399 billion last month, with holdings increasing by 21.2 tonnes from April levels. Aggregate holdings stood at 1,773.7 tonnes at the end of the month.
The council said that “a notable price rebound before the expiry date of major gold ETFs’ options” may also have pushed holdings higher in North America alongside those aforementioned investor concerns.
European funds experienced net outflows of 2.1 tonnes in May, taking total holdings to 1,523 tonnes. However, funds in the region recorded positive fund flows of $228.4 million over the month.
The WGC explained that “this difference was mostly due to the mechanics of FX-hedged products in Switzerland and Germany, especially amid currency fluctuations related to US debt ceiling uncertainty.” Positive fund flows were concentrated in the UK and France in May, it added.
In Asia, gold ETFs enjoyed net inflows of 0.1 tonnes or $8.6 million last month. Chinese funds continued to report outflows in May but these were offset by inflows in Japanese and Indian vehicles. Funds in the region held a total of 118.2 tonnes of the metal at the end of May.
ETFs in Australia, South Africa, Turkey, Saudi Arabia and the United Arab Emirates rose by 0.04 tonnes (or $24.5 million) in May. This was helped by political and economic uncertainty in Turkey, the WGC noted, which pushed total holdings to 63.4 tonnes at the close of last month.
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