Gold ETFs register more outflows in August

Global gold exchange-traded funds (ETFs) registered outflows of 51 t in August, in line with price performance, industry organisation the World Gold Council reports.

This was the fourth consecutive month of outflows. Funds have now given back two-thirds of the inflows accumulated through to April.

Year-to-date global inflows are 102 t ($7.5-billion), with total holdings at 3 651 t ($202-billion), up 3.6% on the year.

A fresh two-decade high in the dollar – coupled with higher rates – was again a headwind for the gold price, the council says.

It notes that gold failed to break through the $1 800/oz resistance level before succumbing to the pressure following warnings from the US Federal Reserve.

Gold finished the month down 2% to $1 716 /oz, and is lower by 5% on the year.

Outflows were widespread in August, with only the ‘Other’ region seeing inflows, the council indicates.

South African outflows for August were $52.2-million.

North American funds led outflows, falling 40 t (-$2.2-billion, 2.1%), driven by the largest and most liquid US funds.

Continued hawkish commentary from US Fed officials drove two-year rates above the June highs, to levels last seen during the global financial crisis.

Nearly all funds in the region experienced outflows, including those in the low-cost space.

European funds had modest outflows of 4.7 t (-$266-million, 0.3%), led by UK- and Swiss-based funds.

Europe had considerable equity weakness during the month, and the euro broke parity versus the dollar for the first time since 2002, the council points out.

It notes that volatility in Asian gold ETF flows continued as holdings fell by 7.5 t (-$433-million, 6%) after rebounding the previous month.

Chinese funds dominated outflows in August and China remains the country with the most outflows this year.

Indian gold ETFs witnessed minor net outflows during the month (0.1 t), as investors rotated into other asset classes like equities and bonds.

The council says gold trading volumes and futures demand cratered in August.

The gold average daily trading volumes fell considerably in August – which the Council says is common in the summer months – to $109-billion, below 2021’s average level of $131-billion.

It points to futures exchange volumes as the primary reason, with these volumes having fallen by 57% month-on-month in August.