Holdings in gold-backed exchange-traded funds (ETFs) shrank for another month in March, according to the World Gold Council (WGC).
However, the body advised that global outflows narrowed from earlier months thanks to strength in North America and Asia.
Global ETFs fell by 14 tonnes in March to take total holdings to 3,112 tonnes, the WGC announced. This was the lowest cumulative total for more than four years, and down more than a fifth from the record of 3,915 tonnes reported in October 2020.
That said, last month’s outflow was lower than the 49-tonne liquidation reported in February.
March’s $823 million outflow was also far lower than the $2.9 billion one booked in February.
Total assets under management (AUM) rose to 21-month peaks of $222 billion despite those further outflows. This was thanks to an 8% rise in yellow metal prices to then-record highs.
Gold has continued to climb and earlier today reached a fresh summit of $2,363.50 per ounce.
North America and Asia Shine
In North America, investor appetite for gold perked up and ETFs in the region recorded inflows of $360 million.
This — along with the aforementioned rise in bullion prices — drove AUMs to $112 billion.
Total physical inflows stood at around 5 tonnes. This pushed total holdings to 1,574 tonnes.
The WGC said that “inflows were mainly driven by activities in the options market,” noting that “the gold price rally triggered exercises of in-the-money calls in mid-March, creating sizable inflows.”
It added that “the market viewed the US Federal Reserve’s March comments as dovish, spurring further inflows around the time of the Fed’s meeting as yields and the dollar both lowered.”
Meanwhile, funds in Asia recorded their 11th straight month of inflows. These came in at three tonnes at a value of $217 million, taking total holdings and AUMs to 148 tonnes and $11 billion respectively.
The council commented that “China once again led inflows as the local gold price rally attracted investors,” while Japan also witnessed positive flows.
European Funds Fall Again
However, funds based in Europe continued to suffer outflows in March. ETFs saw negative flows of 22 tonnes, which in turn took total holdings to a 51-month trough of 1,331 tonnes.
Outflows came in at $1.4 billion, although AUMs rose to $95 billion thanks to the rising metal price.
The WGC said that “the UK accounted for the bulk of the loss despite the Bank of England’s dovish tilt in its March meeting, which led to lower government bond yields and a weaker pound.”
It added that “although scattered inflows were evident when the gold price surged, outflows emerged when gold’s momentum paused – likely due to profit-taking activities.”
Demand for safe-haven gold also fell as major central banks edged towards or started cutting interest rates, the WGC said, which boosted investor interest in risker assets.
