Gold-Backed ETFs See Inflows Increase

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Gold-backed ETFs see inflows increase alongside gold price recovery – AUM 7% below record tonnage high

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According to new data WGC released today, gold-backed ETFs saw modest inflows in July, adding US$669mn following a recovery in gold price driven by concerns of an uncertain global growth outlook and central banks’ reaffirmed easy monetary policies despite elevated inflation. Globally, gold-backed ETF AUM now stands at US$214bn, approximately 7% below the record tonnage high in October 2020.

The Price Of Gold Recovers

Additional report highlights include:

  • Regionally:
    • North American funds: declined by US$402mn (0.4% AUM) with outflows driven primarily by large U.S. funds.
    • European funds: up US$999mn (1.1% AUM). In contrast to the previous month, European funds, particularly in Germany and the UK, drove global July inflows. The increase in total AUM coincided with the European Central Bank’s decision to implement monetary policy supportive of growth.
    • Asian funds: up US$54mn (0.7% AUM), supported by positive investment demand in China linked to attractive local gold price amid equity declines.
  • Low-cost ETFs continued their momentum, accounting for a combined US$695mn of inflows across North America and Europe. They now represent over 5% of the global gold ETF market.
  • Gold daily trading averages remain consistent with June and YTD levels at US$163bn per day.
  • Gold price recovered, finishing July 3.6% higher at US$1,826/oz as interest rates declined and a monetary policy outlook became favorable.

Additional insight on key drivers of current gold performance are available in the July Gold Market Commentary also released today.

Comments on The Increase In Gold-Backed ETFs

Adam Perlaky, Senior Analyst, comments on the increase in gold-backed ETFs.

“July was marked by a marginal increase in ETF inflows, as AUM reached US$214bn behind increased activity in Germany and the UK. We expect gold performance will continue to be supported by higher inflation expectations, especially if the Federal Reserve continues to prioritize employment over inflation. Looking forward, historically, September has also been a strong month for gold performance driven by seasonal consumer demand.”

“Gold remains a valuable asset for investors to implement in their portfolios as market volatility remains a valid concern. Gold’s performance this past month can be drawn from evolving momentum and shifting interest rates coupled with gold price recovery prompted by the fall in US Treasury yields and increased net long positioning.”