Global physically backed gold ETFs witnessed another month of outflows in February 2023, losing a total value of $1.7 billion during the period, said the World Gold Council in its latest report. This represents the longest monthly losing streak since January 2014, according to data tracked by the Council.
A stronger dollar and rising yields led to a 5% decline in the gold price for the month, which may have discouraged gold ETF investors, the Council said. The outflows were widespread, with the exception of funds in the other region, where collective holdings rose marginally.
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Overall, collective gold ETF assets under management (AUM) declined by 1% to $200 billion, WGC data shows. Meanwhile, global gold ETF holdings saw the 10th consecutive month of tonnage decline, falling by 34 tonnes (-1.0%) in February to 3,412 tonnes. During the first two months of 2023, global gold ETFs lost $3.4 billion (-61t, -1.8%).
European funds continued to drive global outflows as the region’s central banks kept delivering outsized rate hikes. After losing $1.2 billion (-25t, -1.7%) in February, European funds recorded their 10th consecutive monthly outflow, although at a slower pace than January ($2.1bn). UK funds (-$740m, -13t) once again made up the bulk of the region’s outflows.
North American gold ETFs lost $547 million (-10t, -0.6%), their first monthly outflow in 2023 after two consecutive months of inflows. As US inflation pressure has unexpectedly intensified, investors are now anticipating higher interest rates for longer. Coupled with the gold price fall, local appetite for gold waned, the Council said.
Funds listed in Asia saw mild outflows of $4 million (-0.1t, -0.1%) during the month. Japan inflows (+$17m, +0.3t) were outweighed by outflows from funds listed in China (-$45m, -0.7t). Funds in the other regions witnessed another inflow of $83 million (+1t, +2%) in February, mainly helped by Turkey (+$82m, +1t).
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