Gold ETFs globally recorded their ninth consecutive month of inflows in August, albeit at their slowest pace for 2020, according to data from the World Gold Council.
Gold ETFs recorded their lowest monthly net inflows year-to-date in August.
Collectively, gold ETFs added 39 tonnes during the month, equivalent to $2.1 billion or 0.9% of assets under management.
This compared to net inflows of 166t ($9.7bn, 4.0% AUM) in July and 104t ($5.6bn, 2.7% AUM) in June.
The price of gold reached a record high of $2,067 early in August before ending the month down 0.38%, the first negative monthly performance for the precious metal since March.
Year-to-date, gold ETFs have accumulated 938t ($51.2bn) in net new assets and have boosted their collective holdings to an all-time high of 3,824t ($241bn).
Regional flows
Strong inflows continued in North America during August as holdings increased by 41t ($2.5bn, 1.9% AUM) with all 16 gold ETFs listed in the region growing their AUM. The iShares Gold Trust (IAU US) led global inflows with 13.9t ($897m, 2.9% AUM), followed by the SPDR Gold Shares (GLD US) which added 9.5t ($662m, 0.8% AUM).
European gold ETFs, on the other hand, experienced redemptions of 11t ($937m, 0.9% AUM), the region’s first net outflows since November 2019. The Invesco Physical Gold (SGLD LN) was the only fund with meaningful inflows, adding 5.1t ($315m, 2.3% AUM). According to the World Gold Council, outflows were driven by euro-denominated German-based gold ETFs, potentially indicating that a stronger euro, which has appreciated 9% against the US dollar over the past four months, has contributed to reduced gold demand in Europe.
There was a meaningful increase in Asian-listed gold ETF assets of 7t ($459m, 6.5% AUM) driven by investor appetite and new funds launched in the region.
Looking ahead, the World Gold Council believes low rate expectations and higher inflation allowances could bode well for gold ETF demand. Late in August, Federal Reserve Chairman Jerome Powell announced a major shift in US monetary policy by no longer pre-emptively increasing rates to cool higher inflation, suggesting that rates could remain near zero for many years.
Furthermore, the continued disconnect between economic data and risky assets like equities is likely to maintain gold’s safe-haven appeal.