24K99 News The World Gold Council (WGC) announced the flow of global gold ETFs in September, carrying out a regional and fund-specific analysis of gold holdings and flows in US dollars. The data showed that North American funds dominated inflows, and Europe became the only region with net outflows. In North America, call options within the price of major gold ETFs are exercised, generating large inflows of capital before the expiration date.
Gold-backed ETFs and similar products make up a large portion of the gold market, and institutional and individual investors use them to implement many investment strategies. ETF flows generally highlight short-term and long-term views and desires to hold gold.
In the World Gold Council report, 3 key points were listed:
1. Global gold ETF inflows have been extended continuously for five months, with North America leading;
2. Recent capital inflows eventually turned the year-to-date capital inflow of global gold ETFs to a positive value of 0.389 billion US dollars, making Europe the only region with a net outflow;
3. Along withOTC tradingThe increase in activity led to a slight increase in global gold trading volume.
(Source: WGC)
In September, global physical gold ETFs flowed in for the fifth month in a row, attracting a total of 1.4 billion US dollars. In the same month, capital inflows were mainly concentrated in North America, while Europe was the only region with capital outflows (although not significant). Thanks to continued capital inflows and record gold prices, global asset management (AUM) grew 5% to $271 billion, reaching a new high at the end of the month. By the end of September, total holdings had climbed 18 tons to 3,200 tons.
Continued capital inflows in recent months have reduced the year-to-date outflow of global gold ETFs to $0.389 billion. Recent capital inflows and a sharp rise in gold prices have contributed to a 26% increase in total managed assets (AUM) from year to date. It is worth noting that North American fund inflows from the beginning of the year to date have turned positive, and Europe is the only region with outflows so far in 2024. Meanwhile, despite a recent slowdown in demand, Asian funds have continued to dominate global capital inflows since the beginning of the year.
North American funds experienced capital inflows for three consecutive months, and capital inflows increased by 1.4 billion US dollars in September. The Federal Reserve unexpectedly cut interest rates by 50 basis points at the September meeting, causing US Treasury yields and the US dollar to fall that month. Related to interest rates and the US dollarOpportunity costsThe decline has boosted investors' interest in gold ETFs. Similar to previous months, the sharp rise in gold prices not only attracted investors' attention, but also led to the exercise of intra-price call options on major gold ETFs, generating large inflows of capital at maturity.
“We believe the heightened geopolitical tension in the Middle East this month will also help attract inflows of gold ETF funds as investors seek safe haven,” the World Gold Council stated.
Europe had an outflow of $0.245 billion in September, ending four months of continuous inflows. The outflows mainly come from UK funds. Compared with the Federal Reserve's easing policy, the Bank of England (BoE) has a more conservative attitude. Interest rates remained unchanged at 5% at the September meeting. The reason is that accelerated wage growth poses an upward risk of inflation. The Bank of England's cautious move has cooled investors' expectations for future interest rate cuts and has driven a sharp rebound in British Treasury yields, which coincides with the outflow of major local gold ETFs. In contrast, Germany and Switzerland both experienced capital inflows. Although the inflows were small, they were probably driven by safe-haven demand due to deteriorating economic prospects (Germany in particular).
Meanwhile, although the European Central Bank (ECB) suspended interest rate cuts this month, expectations for further interest rate cuts in October continued to intensify, leading to a sharp drop in local yields and possibly an increase in demand for gold. The region once again saw inflows related to foreign exchange hedging, although slower than in August, mainly due to the continued strengthening of the local currency against the US dollar.
In September, Asian funds attracted $0.175 billion, with inflows from the region for 20 consecutive months. India is once again seeing strong inflows, and the driving factors are not much different from previous months. At the same time, strong gold price momentum and rising geopolitical risks are also driving factors. Capital inflows to China were moderate, as the stock market rose later this month, driven by the government's aggressive stimulus plan, distracted some investors from gold, despite the strong performance of gold.
Funds from other regions have flowed in for the fourth month in a row. The inflow of $0.12 billion in September was mainly from Australia and South Africa. Although the Reserve Bank of Australia (RBA) kept interest rates unchanged, local yields generally declined during the month due to cooling inflation and weak economic growth. As gold prices in local currency hit record highs, Australian gold ETFs have been inflows for four consecutive months.
Meanwhile, the Bank of South Africa cut interest rates by 25 basis points, leading to a sharp drop in local yields and weakening the rand, triggering the fifth consecutive month of gold ETF inflows into the region.
