According to the latest report from the World Gold Council, global gold-backed exchange-traded funds (ETFs) experienced inflows for the third consecutive month in July, with a total increase of $3.7 billion in gold investments. This growth was primarily driven by the strong performance of North American funds, leading to the best monthly inflows for global gold ETFs since April 2022.
The report noted that while overall data was strong, there were significant regional differences in performance. Western countries' gold ETFs contributed to most of the monthly inflows, boosting global assets under management (AUM) by 6% to a new high of $246 billion. This growth was accompanied by a 4% rise in gold prices, increasing global gold ETF holdings by 48 tons to 3,154 tons.
The World Gold Council also emphasized that the consecutive inflows in recent months have reduced global gold ETF losses to $3 billion. Despite an overall reduction in holdings of 72 tons (around 2%) in 2024, the 17% increase in gold prices has still led to a 15% growth in these funds' AUM.
In terms of regional distribution, North American funds recorded $2 billion in inflows, reversing the small outflows of the previous two months. The market environment in July was exceptionally volatile, with events from an assassination attempt on Trump to Biden's withdrawal from the presidential race driving investor demand for safe-haven assets, thus boosting gold ETF inflows. Moreover, the decline in US inflation, a cooling job market, and expectations of a Fed rate cut in September also supported gold prices.
Although the trend in July favored North American funds, year-to-date in 2024, North American and European funds still posted net outflows of $2.9 billion and $3.7 billion, respectively. However, the European market performed well in recent months, recording inflows for three consecutive months, with $1.2 billion attracted in July alone, marking the best monthly performance since March 2022. Gold ETFs in the UK and Switzerland were particularly notable in this growth.
Meanwhile, the Asian market also performed well, with a net inflow of $438 million in gold in July, with India contributing the largest share. India's strong demand benefited from recent budget reforms that shortened the qualifying period for long-term investments and reduced associated tax rates, making the investment environment for gold ETFs more fair and attractive. Additionally, the overall performance in Asian markets was supported by a weak stock market and rising local gold prices.
Overall, the global gold market performed strongly in July, with positive trends in capital flows across regions, particularly driven by the North American and European markets. Global market trading volume also rebounded significantly, with average daily trading reaching $250 billion, a 27% increase from June. Analysts believe that with increasing expectations of interest rate declines, the outlook for the gold market remains optimistic.
