Rising Assets
Global gold ETFs see first inflows in December since 2019, says WGC
This story was originally published at 10:07 IST on 9 January 2025
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MUMBAI – Global gold exchange-traded funds saw inflows for the first time in December since 2019, led by European and Asian funds, with assets rising by 3.6 tonnes from a month ago to 3,218.8 tonnes, the World Gold Council said in a report Wednesday. In value terms, however, the assets under gold exchange-traded funds fell by $3.8 billion to $270.5 billion because of a decline in gold price by 1.5% last month.
"In 2024, the gold price reached new all-time highs 40 times, global investor appetite for gold ETFs finally turned around, booking the first annual inflow in four years," the WGC said. A rocketing gold price, alongside a small but positive $3.4 billion net inflow across physically-backed global gold ETFs, pushed their total assets under management to jump by 26% in 2024 to $271 billion.
In December, European gold exchange-traded funds saw mild inflows of $337 million, led by higher demand in France due to ongoing political turmoil. "The elevated geopolitical risks continued to contribute to European inflows, although these were largely offset by outflows from Switzerland – mainly from FX-hedging products amid the weakening local currency against the dollar – and Germany – potentially driven by a sharp rise in its government bond yields," the report said.
Asian gold exchange-traded funds saw inflows of 8.7 tonnes, or $747.7 million, in December, led by higher inflows into China, WGC said. "Plunging government bond yields amid intensifying expectations of further rate cuts from the central bank and a weakening local currency on concerns of a potential trade war with the US drove up local investor safe-haven demand," the WGC said.
Indian gold exchange-traded funds witnessed an inflow of 0.9 tonnes in December. The country experienced the eighth consecutive month of inflows, albeit moderating, as rising equity market volatility and bullish sentiment towards gold continued to attract investors. The total assets under management in the country rose to 57.5 tonnes in December from 56.6 tonnes in November.
Holdings with North American funds saw an outflow of 4.7 tonnes, or $341.6 million in December, after five-months of inflows, the report said. WGC said that despite an anticipated 25-basis-point rate cut last month, the US Fed sent a hawkish signal as it updated projections to show fewer rate cuts in 2025 amid expectation for a stubborn inflation. "Consequent rises in US Treasury yields and the dollar weighed on the gold price, leading to gold ETF outflows", it said.
Gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell by 6.1 tonnes to 872.2 tonnes in December.
The daily average trading volume across all gold markets dropped 24% on month to $221 billion in December from $290 billion in November, because of lower volumes at COMEX and Shanghai Futures Exchange, as the limited gold price volatility discouraged tactical investors. Total net long positions on the COMEX fell by 4 tonnes to 764 tonnes as of December-end, with net long positions of money managers falling by 9% from a month ago to 567 tonnes.
The gold price strength and rising safe-haven demand amid uncertainties stemming from various fronts attracted investors, it said. At 0910 IST, gold on the COMEX was at $2,680.10 per ounce, up 0.3% from Wednesday's close. End
US$1 = INR 85.92
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Sandeep Sinha
Edited by Akul Nishant Akhoury
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