Women shop in the Dubai Gold Market, one of the busiest jewelry markets in the Middle East. France Media Agency

Staff Journalist, Gulf today

Global gold exchange-traded fund ETFs saw $28 billion ($1.7 billion) in outflows in June. This is the second consecutive month of outflows, following the 53t that left these funds in May. While recent inflows were enough to push the second quarter to net outflows of 39t ($2bn), year-to-date net inflows remained positive at 234t ($14.8bn ). Total holdings at the end of June stood at 3,792 t ($221.7 billion), up 6% since the start of the year.

North American and European funds were the only regions to record outflows in June. North American holdings fell $26 billion ($1.5 billion), with outflows dominated by the largest and most liquid US funds. An intense focus on the future pace of interest rate increases and a stronger US dollar have been the main headwinds for gold investments. European funds saw more modest outflows of 4t (US$245m), concentrated in Switzerland, Germany and France. Despite the bleak economic outlook for Europe, with record inflation and rising sovereign borrowing costs, the European Central Bank has signaled it will raise interest rates in July – the first hike in more than 11 years – which weighed on sentiment. In the UK, holdings rose by $205.4 million even as the Bank of England raised interest rates for a fifth consecutive month.

Holdings in Asia increased slightly (1t, US$66.1m). In China, the limited gold price and the strength of local equities discouraged higher levels of investment in gold ETFs. In India, minor net inflows continued in June, mainly due to market volatility and the depreciation of the rupee, attracting investment in Indian gold ETFs. Holdings in other regions were virtually flat month-on-month. 0F1

Regionally, North American and European funds attracted the lion’s share of investments. In the first half, holdings of US funds increased by 133t ($8.1bn) and European funds added 119t ($7.5bn). Funds in “other” regions increased by just over 2t. Asia was the only region to see net outflows in the first half of 2022, down 16t, with Chinese funds being the main contributor. While the bulk of Chinese outflows were in the first quarter, impacted by the New Year holiday and tactical trading in a rising gold price, falling gold price volatility and catches earnings led to further outflows in the second quarter.

Investors around the world face a challenging environment in the second half of 2022, having to contend with a noxious compound of rising interest rates, high inflation and geopolitical risks. In the near term, the price of gold is likely to remain sensitive to real rates, the speed with which global central banks tighten monetary policy, and their effectiveness in controlling inflation. To learn more, see our mid-year outlook report.

Gold Trading Volumes and Futures Demand Subdued in June Average daily gold trading volumes totaled US$118.2 billion in June, below the average of US$137.3 billion US in May. Declines in OTC, exchanges and gold ETFs contributed to the mum drop, although China was a bright spot with higher trading volumes on the Shanghai Gold Exchange and ETFs on Chinese gold in June. The latest Commitment of Traders (COT) report for Comex showed that net long positioning declined slightly in June. In the week ending June 28, net long positions totaled 513t (US$30bn), down from 564t (US$33.4bn) at the end of May.

As of June 30, 2022. “Global inflows” refers to the sum of changes in all funds that have had a net increase in ounces held over a given period (e.g. month, quarter, etc.) . Conversely, “global outflows” include changes in funds that have seen the number of ounces held decrease over the same period. Please note that the flow estimates in US dollars and the equivalent change in tonnes may differ due to differences in the methodology used to calculate each metric. For more information, see ETF Flows data methodology.

We calculate gold-backed ETF flows in both ounces/tonnes of gold and US dollars, as both of these measures are relevant to understanding fund performance. The change in tonnes gives a direct measure of how the holdings are changing, while the dollar value of the flows is a financial industry standard that gives perspective on how much investment is hitting the funds. We have made some adjustments and improvements to our calculation methodology as of July 1, 2021 that will impact historical and future data. Specifically, we have revised the methodology used to estimate changes in gold holdings, as described below:

Previously, changes in tonnes were calculated by converting a fund’s assets under management (in USD) to gold holdings (in tonnes) and calculating the difference over time periods. However, currency fluctuations and large daily and weekly fluctuations in the price of gold could distort the difference between the change in tonnage and the flow of US dollar funds in the short term. We therefore adjusted

As of June 30, 2022. “Global inflows” refers to the sum of changes in all funds that have had a net increase in ounces held over a given period (e.g. month, quarter, etc.) . Conversely, “global outflows” include changes in funds that have seen the number of ounces held decrease over the same period. Please note that the flow estimates in US dollars and the equivalent change in tonnes may differ due to differences in the methodology used to calculate each metric. For more information, see ETF Flows data methodology.

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