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Informist, Monday, Feb. 10, 2025

 

MUMBAI – Global gold exchange-traded funds saw net inflows for the second consecutive month in January, with assets rising by 34.5 tonnes from a month ago to 3,253.3 tonnes, the World Gold Council said in a report Monday. In value terms, the assets under gold exchange-traded funds rose to $294.2 billion from $270.5 billion because of higher gold price, the council said.

 

"Despite gold's strong performance, North American investors remained net sellers of gold ETFs in the month, while Asia and the other regions saw limited inflows." The global gold trading volumes rose 20% in January, mainly driven by increased over-the-counter transactions and exchange volumes.

 

In January, European gold ETFs saw the largest inflow since March 2022, adding $3.4 billion during the month as UK and Germany dominated the inflows. European funds added 39 tonnes of gold during January and their total holdings stood at 1,326.7 tonnes.

 

"In the UK, government bond yields fell notably during the second half of January as easing inflation pressure and soft economic data prints raised investor expectations for rate cuts from the Bank of England during 2025," the WGC said. In Germany, political uncertainties ahead of the earlier-than-scheduled parliamentary elections in late February, pessimistic growth outlook from the government, and risks related to US trade policies all contributed to higher safe-haven demand, drawing local investors to gold, according to the report.

 

Moving to Asian funds, the global body said Indian gold ETFs experienced record inflows in January as investors redirected cash to gold amid ongoing global uncertainty and further weakness in domestic equity market. Asian gold ETFs saw inflows of $57.1 million and added 0.3 tonnes. India saw $400.4 million fund flows and added 4.4 tonnes during January. India's total holdings were 61.9 tonnes in January.

 

In India, Kotak Gold ETF saw an inflow of 1.2 tonnes, or $111.6 million in January and ranked 11 globally in terms of inflows. HDFC Gold Exchange Traded Fund saw fresh flow of 1.2 tonnes, or $107 million and ICICI Prudential Gold iWIN ETF saw an inflow of 1 tonne, or $93.4 mln. They were ranked 12 and 13 globally in terms of inflows.

 

However, North American funds saw net outflows for two consecutive months, losing $499.4 million in January. North America's total holdings stood at 1,644.6 tonnes, down 5.9 tonnes from the previous month. "Investors stayed busy this month particularly around President Trump's inauguration, and the subsequent news that followed around tariffs, rates, and the dollar," according to the report. 

 

But these funds saw positive flows later during the month as investors likely captured profits amid a record-level gold price, the global body said. However, a pick-up in demand in the last week of the month was unable to offset earlier outflows, it added.   

 

Gold trading volumes averaged $264 billion per day across global markets in January, which is 20% higher from the previous month. "The increase can be mainly attributed to surging volumes at COMEX, which pushed activities at exchanges around the globe 39% higher month-on-month – as the gold price strength attracted traders." Meanwhile, the over-the-counter market rose 10% on month, and global gold ETFs rose 23% on month due to increased trading during the month.

 

Total net long positions on the COMEX climbed by 188 tonnes to 952 tonnes as at January-end, with net long positions of money managers rising by 26% from a month ago to 717 tonnes. WGC said that the gold price strength and tariff-related fears were primary drivers of increased long positioning. At 2116 IST, gold on the COMEX was at $2,935.70 per ounce, up 1.7% from Friday's close. End

 

US$1 = INR 87.48

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by J. Navya Sruthi

Edited by Ashish Shirke

 

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