Global Gold ETFs Decline By $6.7 Billion In 2024, WGC Says Worst H1 Since 2013

Gold ETFs are defined as regulated securities that keep gold in its physical form. Closed-end funds, mutual funds, and open-ended funds are some examples of gold ETFs

Global gold exchange traded funds (ETFs) saw an erosion of $6.7 billion in the first six months of the 2024 calendar year (H1), the World Gold Council (WGC) revealed recently. The global body said that physically backed gold ETFs witnessed their worst first half in a year since 2013. The overall holdings declined 3.9 per cent to 3,105 tonne during the period, the council said.

The council in its note said that Western gold ETF investors didn’t respond to the surge in gold prices as expected amidst rising interest rates. If the investors reacted accordingly, it would have driven up investment flows, reported Business Standard.

“While Asian funds attracted a record $3 billion during the first half of 2024 (H1-CY24), they were significantly outpaced by collective outflows in North America and Europe to the tune of $9.8 billion. In contrast, Asian flows rhymed with the price strength – weaknesses in non-dollar currencies and gold’s staggering performance in those currencies attracted investors in the region,” the council said.

Notably, gold ETFs are defined as regulated securities that keep gold in its physical form. Closed-end funds, mutual funds, and open-ended funds are some examples of gold ETFs. These assets are generally tracked by the WGC in either the quantity of gold held by them or the value of the gold holdings in US dollars. The council also keeps track of how these assets fluctuate over time by monitoring the two metrics - demand and fund flows.

The council further noted that Asia remained an exception and clocked inflows of $3.1 billion in the first six months of 2024, surpassing all the other markets and emerging as the only region that logged positive flows. On the other hand, North America witnessed outflows of $4.9 billion during the period under review.

“Supported by record-breaking inflows and a higher gold price, the total AUM of Asian funds reached $14 billion, the highest ever, while collective holdings increased by 41 tonnes,” the council said.