Global gold-backed exchange-traded funds (ETFs) reported positive monthly flows for the first time in a year in May, according to the World Gold Council (WGC).
Total fund holdings rose to 3,088 tonnes by the end of last month, a rise of 8 tonnes from April levels. In monetary terms, inflows totalled $529 million.
These inflows — combined with a rising gold price — pushed cumulative ETF assets under management (AUMs) to $234 billion.
However, physical holdings remained 8.2% below the average of 3,363 tonnes recorded in 2023.
AUMs were boosted by the yellow metal reaching new record peaks around $2,450 per ounce last month.
Europe Rebounds
European funds recorded their first inflow for a year in May thanks to solid buying on the mainland, the WGC said.
Total holdings rose by 6 tonnes last month to 1,285 tonnes. In monetary terms, inflows totalled $287 million, which helped push AUMs in the region to $97 billion.
The WGC said that “the region experienced a tale of two policies” last month. It noted that “inflows were mainly driven by expectations that the ECB would cut rates in early June, as primarily reflected in Swiss and German funds.”
Swiss ETFs enjoyed their first inflow since July 2023, the body noted, while Germany experienced just its second in the current calendar year.
However, the WGC commented that British funds experienced outflows in May as “an earlier-than-expected UK election paired with stickier-than-anticipated inflation pushed back investor expectations for rate cuts by the Bank of England.”
North America Slips
Positive flows in Europe offset a fresh outflow in North America, the world’s biggest gold ETF market.
Aggregate physical holdings there dropped to 1,573 tonnes in May, a month-on-month decline of 2 tonnes.
However, a buoyant gold price still lifted total AUMs in the territory to $119 billion. Outflows totalled $139 million last month.
The WGC said that “flows in North America flipped back to negative in May following two consecutive monthly inflows. But compared to the region’s outflows in prior months the negative May figure was the smallest since December 2019.”
It added that “investor interest appeared to be drawn to spikes in geopolitical risks [in May].” However, it also noted that “hawkish Fed minutes from its latest meeting weighed on the gold price towards the end of May, leading to outflows in the region.”
Rallying share markets may also have diverted attention away from safe-haven gold, the WGC said.
15 Straight Increases In Asia
ETF inflows also remained solid in Asia in May, with funds there enjoying positive flows for the fifteenth straight month.
Physical holdings rose by $399 million or 5 tonnes, the organisation said, to take the total to 172 tonnes. This drove AUMs to $14 billion.
The WGC said that “although this marks the region’s smallest inflow since November 2023, Asia’s continued inflow streak is the second longest on record.” Buying activity was once again dominated by China.
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