World Gold Council: Global gold ETF holdings continued to decline in September, leading to a net outflow in the third quarter

In September, there was a net outflow of 15.2 tons of global gold ETFs (approximately US$830 million, and the scale of asset management decreased by 0.6%). The inflow from the Asian market failed to exceed the outflow from the European and North American markets. In January of this year, global gold ETF holdings fell to 3592 tons (approximately US$20.1 billion), the lowest since April. The reason is that rising U.S. Treasury yields, a stronger U.S. dollar, and a decrease in the net long position of funds managed by the New York Mercantile Exchange have led to a fall in the price of gold.

Sub-regional market review

European funds were the main driving force behind the outflow of global gold ETFs in September, followed by North American funds. Larger funds in the UK and Germany led the outflow from the European market, with an overall outflow of 11.5 tons (US$640 million). A total of 6.6 tons (US$349 million) flowed out of North America, mainly due to the outflow of large US funds. The outflow from these two regions stems from the central bank’s announcement that it will tighten its policies in the future-the European Central Bank has cancelled the large-scale emergency purchase plan, while the Federal Reserve has stated that it will reduce the scale of asset purchases in the fourth quarter, and there are also expectations for interest rate hikes next year. Improved. In contrast, funds listed in Asia had a net inflow of 2.4 tons (US$135 million) in the third quarter. Increased stock market volatility and corrections in domestic gold prices pushed Indian gold ETF holdings to the highest level since September 2013. level. Other regions also contributed to the global gold ETF, with 0.4 tons (US$25 million) inflows

Gold price performance and trading volume

The price of gold fell by about 4% in September to US$1,743 per ounce. The World Gold Council’s short-term price performance model shows that the sell-off of gold in September was driven by changes in interest rates, the strengthening of the U.S. dollar, and the momentum of futures position adjustments. Due to expectations of possible tightening of loose monetary policies by central banks, U.S. bond yields rose to quarterly highs. This in turn supports the strength of the U.S. dollar, because taking into account the inflation expectations in the United States, the actual rate of return has basically risen simultaneously with the nominal rate of return. After a month of the lowest slump since June, the price of gold fell in the third quarter, down more than 8% from the same period last year. In September, the average daily trading volume of gold rose from a low of US$141 billion in August to US$146 billion, but it was still lower than the average price of US$160 billion so far this year. The trading volume of the New York Mercantile Exchange (COMEX) only increased slightly from the low point since the beginning of August, and the net long position of futures reflects the general lack of interest in the market as of recently. It fell to 537 tons (30 billion yuan) in the second half of the month. Dollar). However, this is still slightly higher than the historical weekly average of around 500 tons ($28 billion).

Highlights of the third quarter of 2021

Gold ETF holdings basically followed the fluctuation of gold prices in the third quarter. North American funds had the highest outflow rate, with an overall outflow of 46.3 tons (approximately US$2.6 billion, with a 2.4% drop in asset management scale). The outflows from the North American market were mainly large-scale U.S. funds, most of which occurred in August. During this period, due to rising inflation expectations, European funds have become more resistant to price declines, resulting in a net inflow of 15.2 tons (approximately US$ 909 million, and the scale of asset management increased by 1.0%). This was mainly driven by German funds. Similar to the second quarter, Germany accounted for more than half of the total inflows into the European market (approximately 8.9 tons, US$516 million). Low-cost ETFs in this region continued to show strong growth, helping to ease capital outflows, adding a total of US$920 million (15.9 tons).

Asian funds inflows of US$228 million in the third quarter (asset under management increased by 3.0%), because investment demand remained strong amidst the turmoil in Asian stock markets. In addition, the falling price of gold has prompted some investors to strategically establish gold positions when the price of gold is falling. Supported by weakness in emerging market stock markets, inflows from other regions in the third quarter were US$13 million (asset under management increased by 0.4%).

Review of sub-regional markets in the third quarter of 2021

① In September, the outflow of funds from European and North American funds exceeded that of Asian funds. ② The outflow from European funds was 11.5 tons (approximately US$640 million, and the scale of asset management decreased by 0.7%)
③ The outflow of funds held by North American funds is 6.6 tons (approximately US$349 million, and the scale of asset management decreased by 0.3%)
④ The net inflow of listed funds in Asia is 2.4 tons (approximately US$135 million, and the scale of asset management increased by 1.7%)
⑤ In other regions, there was an inflow of 0.4 tons (approximately US$25 million, and the scale of asset management increased by 0.7%).

Changes in individual investor positions

① In September, SPDR Gold Shares in the United States and iShares Physical Gold in the United Kingdom promoted the outflow of global funds, which was partially offset by funds flowing into Asian funds and iShares Gold Trust in the United States.

② In North America, SPDR? Gold Shares outflowed 10.2 tons (approximately US$561 million, asset management scale decreased by 1.0%), while iShares Gold Trust's capital inflow was 2.5 tons (approximately US$145 million, asset management scale increased by 0.5%) ). Low-cost ETF iShares Gold Trust Micro rose 0.6 tons (approximately US$37 million, asset management scale increased by 6.2%), and Goldman Sachs Physical Gold rose 0.5 tons (approximately US$29 million, asset management scale increased by 7.6%).

③ In Europe, iShares Physical Gold outflows 6.2 tons (approximately US$351 million, asset management scale down 2.7%), and Invesco Physical Gold outflows 1.5 tons (approximately US$81 million, asset management scale down 0.6%). On the other hand, Xtrackers IE Physical Gold has an inflow of 1.7 tons (approximately US$93 million, asset management scale increased by 4.7%), while Xetra Gold increased by 0.8 tons (approximately US$48 million, asset management scale increased by 0.3%) .

④ In Asia, China’s Huaan Yifu Gold ETF (Huaan Yifu Gold ETF) inflows 1.1 tons (approximately US$58 million, asset under management increased by 3.4%), while India’s Nippon India Gold inflows 0.5 tons (approximately US$31 million, The scale of asset management increased by 3.9%).

Long-term trend

After a partial recovery in the second quarter, as gold prices continued to weaken, gold ETFs in developed markets were flat to negative again in the third quarter.

So far this year, global gold ETFs have seen an outflow of US$8.3 billion (approximately 156 tons). The assets of large North American and European funds have flowed out with fluctuations in gold prices, while low-cost ETFs and Asian funds have remained active.

The Asian gold ETF rebounded from the decline in capital inflows in the second quarter and once again became the main growth driver of the global gold ETF. With the intensified economic uncertainty in the region, the Asian gold ETF increased by nearly US$1.2 billion (asset management scale increased by 17%) ).

Despite different price conditions, low-cost ETFs continue to achieve capital inflows, with an annual growth rate of close to 43% (approximately 60.1 tons), accounting for approximately 6% of the total global gold ETF market.