World Gold Council: Global physical gold ETFs have seen outflows for the ninth consecutive month in February, with outflows of approximately $2.9 billion.

On March 8, the World Gold Council released a statement saying that global physical gold ETFs saw outflows for the ninth consecutive month, with outflows of around $2.9 billion in February. At the same time, due to a 0.3% drop in gold prices, total assets under management (AUM) decreased to $206 billion (a 1.8% decrease from the previous month), the lowest value since September of last year. Total holdings of global gold ETFs decreased by 49 tons to 3,126 tons, a 20% drop from the peak of 3,915 tons in October 2020. The last time global gold ETFs saw a similar decline was during the period from May 2022 to February 2023, when the outflow trend lasted for 10 months. Nevertheless, the continued outflow of gold ETFs in this round has almost no negative impact on gold price performance, as resilient consumer demand and strong gold purchases by global central banks continue to support gold prices. North America led in fund outflows, while outflows in European funds narrowed. In contrast, Asia has seen twelve consecutive months of net inflows into gold ETFs, while outflows in "other regions" have been limited. Chart 1: Global gold ETF outflows have continued for the ninth consecutive month* Regional gold ETF flows and gold prices Funds in North America have seen outflows for two consecutive months, with outflows of around $2.4 billion in February. The strong labor market, higher-than-expected inflation data, minutes from the Federal Reserve meetings, and recent statements by Fed officials have delayed market expectations of interest rate cuts. As a result, the yield on the U.S. ten-year Treasury bond has sharply rebounded, coupled with a strengthening U.S. dollar, putting pressure on gold prices and leading to a decrease in North American gold ETF holdings. The continued strength of the U.S. stock market has redirected investors' attention, further weakening demand for gold. In the first two months of 2024, North American funds have seen outflows of around $4.7 billion, marking the second worst start to a year in history, second only to 2013 (-$5 billion). Following the February outflows, total holdings of North American gold ETFs have dropped to the lowest point in four years. European funds have seen outflows for the ninth consecutive month (-$719 million). Overall, similar to North America, the main reasons for the decreased interest of European investors in gold ETFs include: investors readjusting their expectations for a change in monetary policy of the European Central Bank, leading to a rebound in government bond yields; weak performance of gold prices denominated in local currencies; and continued rebound of European stock markets. However, there have been some positive signals: the outflow in European funds in February was the lowest in the recent period since October 2023, mainly driven by German funds, suggesting that the shrinking German economy and other uncertainties may be reversing investors' bearish sentiment towards gold. So far in 2024, European funds have seen cumulative outflows of around $1.5 billion, with total AUM dropping to the lowest point in five months. At the same time, total holdings have decreased to the lowest point since February 2020, with British and German funds leading the outflows in the region since the beginning of the year. Asian funds have seen net inflows for twelve consecutive months, with inflows of around $200 million in February. With stable gold prices in Renminbi, Chinese investors' interest in gold remains strong, leading China's market to lead in fund inflows in Asia. In the past twelve months, Asian funds have seen total inflows of $2 billion, with AUM growing by 41%. "Other regions" have seen limited changes in flows, with outflows of $24 million in February, mainly from Turkey. Global low-cost gold ETFs have seen outflows for the ninth consecutive month, with losses of $220 million in February. Outflows were largest in Europe (-$168 million), while outflows in North America amounted to around $50 million, a significant decrease from the $243 million outflows in January. So far in 2024, global low-cost gold ETFs have seen cumulative outflows of around $426 million, with total AUM ($55 billion) decreasing by 1%. At the same time, total holdings of this category of funds have decreased by 4 tons to 828 tons, the lowest level since April 2021. Global gold market trading volume has decreased In February, global gold market trading volume declined, with an average daily trading volume of $147 billion, down 16% from the previous month. Over-the-counter trading volume dropped to $9.6 billion per day, a 7% decrease from January, possibly due to seasonal weakening in buying activities by Chinese jewelry manufacturers after the Chinese New Year. Average daily trading volume of derivatives traded on major exchanges decreased by 30% to $49 billion, mainly due to a 31% drop in trading volume on the New York Mercantile Exchange (COMEX) with lackluster gold price performance. Global gold ETF market flows remained stable at $18 billion per day, unchanged from January. By the end of February, net long positions in New York Mercantile Exchange gold futures decreased by a further 23 tons from the previous month to 448 tons. With weak performance of the U.S. dollar gold price and global stock markets hitting historic highs, investor attention has shifted away from gold. Net long positions of fund managers decreased slightly by 12 tons to 212 tons. Nevertheless, net long positions began to recover in the second half of February, mainly due to a significant rebound in gold prices during that period.