Investments in physically-based gold exchange-traded funds (ETFs) were negative last week, making net inflows negative for the fourth week in a row, data from the World Gold Council (WGC) showed. It was the highest exit by investors from ETFs this year.
The development comes along with gold shelving most of its gains for this year. For the year-to-date period, net investments were down by 17 per cent for the week ending June 5 to $15.28 billion from $18.46 billion in the week ending May 23.
The US, Canada and China led the outflows from the ETFs last week, with gross investments being $1.05 billion and outflows being $2.71 billion.
Indians encash $61 m
Investors in North America exited to the tune of $1.36, while it was $0.53 billion in Asia and $0.007 billion in other countries. Exit from ETFs by investors seemed to have gathered pace last week as gold prices dropped below $4,400 an ounce.
Rajkumar Subramanian, Head – Product & Family Office, PL Wealth, said that currently, the sharp drop in gold prices is a reaction to a blowout US jobs report, which signals that interest rates might remain higher for longer, strengthening the dollar and pulling money away from precious metals.
In the US, investors encashed $1.27 billion from ETFs, while Canadian investors took home $102 million. Chinese stakeholders exited to the tune of $513 million. Data on India was not available. However, Indian investors encashed $61 million in May, the WGC data showed.
Korea, Japan positive
Year-to-date, Chinese and Indian investors are keeping net investments positive in ETFs. Chinese holdings as of June 5 were $7.29 billion, while Indian holdings were $3.48 billion. So far this year, exits by US investors totalled $3.81 billion, while Italian investors’ investments were negative $208 million and those of French investors were $173.6 million.
Among Asian nations, Korea’s investments were still positive at $851 million, while Japanese inflows were $1.26 billion. Investors in the Special Administrative Region of Hong Kong were also positive at $930.6 million.
Among various global funds, SPDR Gold Shares have witnessed an outflow of $7.09 billion, while iShares Gold Trust has seen exits to the tune of $2.28 billion.
Tonnage holdings
Gold ETFs have been witnessing outflows ever since the Iran war broke out. Gold hit a record high of $5,608 an ounce on January 29. Since then, it has been on a downward trend, shedding over 22 per cent. On Monday, gold was quoted at $4,325.90 an ounce.
In terms of tonnage, ETFs hold 4.106.3 tonnes, compared with 4,120.9 tonnes of the yellow metal as of May 23. However, they were higher than 3,559.2 tonnes a year ago.
The precious metal has dropped since the Iran war broke out on fears of inflation, a hike in interest rates, rising bond yields, soaring crude oil prices and pessimism over global economic growth. From 2024 till January 29 this year, gold witnessed a continuous rally on hopes of a rate cut by the US Fed, the US trade dispute with other countries and geopolitical crises