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WGC Gold ETF Commentary: Outflows sustained into February



Outflows from global physically backed gold ETFs 1 continued for the ninth consecutive month, shedding US$2.9bn in February 2024.Combined with a 0.3% gold price fall, total assets under management (AUM) fell to US$206bn (-1.8% m/m), the lowest since last September. 3 In turn, collective holdings of global gold ETFs lost 49t to 3,126t, 20% lower than their month-end record of 3,915t in October 2020. The last time global gold ETFs experienced a similar decline was between May 2022 and February 2023 when outflows lasted for ten months. Nonetheless, the two recent rounds of sustained outflows had little negative impact on the gold price performance, which was supported by resilient consumer demand and blistering central bank purchases.


North American funds lost the most while outflows from Europe narrowed. In contrast, Asia has now seen net inflows for 12 consecutive months and other regions have seen only limited loss.


North American funds have experienced outflows for two consecutive months, shedding US$2.4bn in February. The still-strong labour market, hotter-than-expected inflation prints, the Fed’s meeting minutes as well as recent speeches by Fed officials continued to push forward investor expectations of a rate cut. Consequently, a sharp rebound in the 10-year Treasury yield alongside a stronger dollar weighed on the gold price and reduced gold ETF holdings in the region. Sustained strength in US equities kept diverting investor attention, further denting demand for gold.


During the first two months of 2024, North American funds lost US$4.7bn, the second worst start to a year ever, ranking only after 2013 (-US$5bn). Following February’s decline, their collective holdings fell to the lowest in four years (Table 3, p4).


Europe experienced outflows (-US$719mn) for the ninth straight month in February. Overall, similar to North America, rebounding government bond yields, as investors adjusted their bets on a monetary policy pivot by the ECB, weak gold price performances in local currencies, and continued rallies in regional stocks drove down local investor interest in gold ETFs.

But there is a silver lining: February’s loss was the smallest since October 2023. The contraction in recent outflows was mainly driven by Germany, where worsening economic conditions and other uncertainties may be turning the bearish tide towards gold. 4


European funds have lost US$1.5bn so far in 2024, dragging their total AUM to a five-month low. Meanwhile, their holdings dropped to the lowest since February 2020. UK and Germany led the region’s y-t-d outflows (Table 2, p3).


Asia recorded its twelfth consecutive monthly inflow in February, attracting US$200mn. China accounted for the bulk of Asian inflows as investor interest in gold persisted amid the weakening local currency and a stable RMB gold price. Over the past 12 months, inflows into Asian funds add up to US$2bn, a stunning 41% rise in total AUM. Fund flows in the Other region were limited, losing US$24mn during the month, mainly from Turkey.


Low-cost gold ETFs around the world continued to witness outflows in February (-US$219mn), the ninth consecutive monthly loss. Europe (-US$168mn) suffered the biggest loss while the US$50mn outflow from North America narrowed significantly compared to January’s US$243mn. 5 So far in 2024, low-cost funds have lost US$426mn, a 1% fall in total AUM (US$55bn). Meanwhile, their collective holdings fell by 4t to 828t, the lowest since April 2021.




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