Gold ETFs saw net outflow of $1.4 billion in October: WGC

Outflows of approximately equal magnitude from Europe and North America were marginally offset by inflows into Asia.

Gold ETFs have experienced outflows in six of the first 10 months of the current calendar year as ETF investors generally follow gold price trends.

Such funds saw a net outflow of 15.2 tonnes, or $830 million, during September as prices plummeted on rising bond yields, a stronger dollar and a fall in COMEX.

“Year-over-year, gold ETFs have seen global outflows of $9.7 billion (-181 tonnes) as large North American and some European funds lost assets in line with volatility in gold prices, while lowering costs.” Wallets and Asian funds have been mostly positive, the WGC said in a report.

North American and European gold ETFs both contributed to October’s outflows, led by large funds in each sector. North American funds saw an outflow of 14.7 tonnes, or $817 million, mostly due to losses from larger US funds. In addition to France, the UK once again led the outflows within Europe, with a combined loss of 12 tonnes or $703 million.

Meanwhile, according to the report, the outflow from Europe came on the heels of higher expectations of a hike in interest rates before the end of 2022, which, despite the European Central Bank’s insistence, had been in a state of high inflation for decades.

Asia-listed funds, on the other hand, were positive, adding 1.3 tonnes, or $74 million, of inflows led by China, where weak economic data and local equity market performance pushed holdings to record highs.

“Inflows into India, however, were slightly negative as investors shifted their focus from gold ETFs to physical bar and coin investments,” WGC said.

In Asia, the Huan Yifu Gold ETF in China had inflows of 1.1 tonnes, or $58 million, while Nippon India Gold in India gained 0.5 tonnes, or $31 million.

The WGC said that despite a weak October, low-cost ETFs continue to inflow regardless of price conditions, rising about 41% YTD (57.7 tonnes), and accounting for around 6% of the total global gold ETF market.

The price of gold rose 1.5% to $1,770 an ounce in October. The WGC’s monthly return attribution model shows that gold’s recovery in October was driven by an increase in inflation expectations, indicated by break-even rates, which exceeded a concurrent increase in nominal interest rate yields.