Gold-backed exchange-traded funds (ETFs) have seen their 11th consecutive month of declines, according to the World Gold Council (WGC). The organization cited heavy liquidations in Europe as the primary reason for the decrease. Total holdings in bullion-backed ETFs dropped by 33 tonnes to 3,080 tonnes, the lowest level in over four years. Despite the outflows, a rise in the gold price led to an increase in total assets under management (AUMs) to $229 billion.
In April, gold prices reached record highs of $2,364 per ounce, driven by fears surrounding the macroeconomic and geopolitical landscape, which increased interest in the safe-haven commodity. However, European gold ETFs experienced further outflows, totaling 52 tonnes and pushing aggregate holdings down to 1,279 tonnes. This marked the eleventh consecutive month of decline in Europe. Outflows amounted to $4 billion, although AUMs rose to $95 billion. The WGC attributed the outflows to investor expectations of delayed rate cuts by the Bank of England and the European Central Bank.
Despite the losses in Europe, North American and Asian gold ETFs saw inflows that helped offset the declines. North American funds received a one-tonne inflow, increasing total holdings to 1,575 tonnes. Inflows totaled $124 million, boosting AUMs to $117 billion. The WGC noted that strong gold price performance triggered inflows into major ETFs, while geopolitical risks and financial market volatilities also contributed to the inflows. In Asia, gold-backed ETFs received inflows of 19 tonnes, equivalent to $1 billion. Asian funds ended the month with 167 tonnes of metal and AUMs of $13 billion, with China being the main driver of inflows.
The WGC highlighted a sluggish equity market, expectations of a weaker local currency, promotional efforts from ETF providers, and strong price performance as the main drivers of inflows in Asia. Chinese gold ETFs saw record monthly inflows and reached their highest AUM ever, indicating a growing interest in the region. Overall, despite the continued outflows in Europe, the positive flows in North America and Asia helped stabilize the gold-backed ETF market and increase total AUMs to $229 billion. Geopolitical uncertainties and financial market volatilities continue to drive interest in gold as a safe-haven asset, supporting the overall demand for gold-backed ETFs.
