Global gold ETF demand strong despite June outflows: WGC

Global demand for gold exchange-traded funds (ETFs) remained strong in the first half of the year, with 28 tonnes ($1.7 billion) outflow in June despite outflows for the second month in a row, compared with 53 tonnes outflow from these funds in May. World Gold Council (WGC).

The committee reported its highest quarterly inflows since the third quarter of 2020 – driven by weak equity markets, rapidly rising inflation expectations and geopolitical events.

While recent inflows were enough to drive second-quarter net outflows of 39 tonnes worth $2 billion, year-to-date net inflows remained positive at 234 tonnes ($14.8 billion). Total holdings stood at 3,792 tonnes ($221.7 billion) at the end of June, up 6 percent from the beginning of the year, the WGC reported.

North American and European funds were the only regions to see outflows in June. North American holdings fell by 26 tons ($1.5 billion), with outflows mostly from the largest and most liquid U.S. funds.

According to the WGC, heightened concerns about the pace of future rate hikes and a stronger dollar are the main headwinds for gold investment. Outflows from European funds were more modest at 4 tonnes ($245 million), concentrated in Switzerland, Germany and France.

Despite a gloomy European economic outlook, record inflation and rising sovereign borrowing costs, the European Central Bank said it would raise interest rates in July – the first in 11 years – weighing on sentiment.

In the UK, holdings rose by $205.4 million despite the Bank of England raising interest rates for the fifth month in a row.

Open interest in Asia rose slightly (1 ton, $66.1 million). In China, range-bound gold prices and a stronger local stock market have hampered greater levels of gold-backed ETF investment, the report said.

In India, small net inflows continued in June, mainly as market volatility and the depreciation of the rupee attracted investment in Indian gold ETFs. It added that holdings in other regions were almost flat month-on-month.arab trade news agency