Global gold ETFs lost 107.5 t (-US$5.9 billion, -2.9% assets under management [AUM]) in March, marking outflows for the fourth month out of five, according to new data from the World Gold Council. This was also the second month in a row in which net outflows ranked the top 10 worst outflows historically. Global AUM stand at 3574 t (US$194.5 billion), back to levels last seen in June 2020. Since the peak asset levels in November 2020, gold ETF holdings have fallen nearly 9% in tonnage terms, on a par with the approximate loss in the price of gold over the same period.
March regional overview
At a regional level, outflows were once again driven by North American funds of 68.5 t (-US$3.8 billion, -3.5%), mainly from the largest funds but also from some low-cost gold ETFs which had previously been spared heavier outflows in recent months. European funds saw outflows of 45.3 t (-US$2.5 billion, -2.9%), from funds across multiple countries. Funds in ‘other’ regions had minor outflows of 0.9 t (-US$64 million, -1.8%). Asian-listed funds, led by China, had another strong month of inflows of 7.2 t (US$427.2 million, +5.8%).
1Q21 overview
North American funds represented 86% of global net outflows, falling by 145.4 t (-US$8.1 billion, -6.7%) in 1Q21. SPDR® Gold Shares lost US$7.5 billion (-10.5%), followed by iShares Gold Trust, which lost US$1.1 billion (-3.6%). There were a few bright spots in the region: SPDR Gold MiniShares saw inflows of US$380 million (9.5%), the largest of any fund globally, followed by newly launched CI Gold Bullion Fund, which added US$369 million. European funds lost 51.7 t (-US$2.5billion, -2.6%) during the quarter, with UK-listed funds accounting for most of the outflows (39 t).
While funds in ‘other’ regions had small inflows of 2.5%, the major positive trend during the quarter came from Asian-listed funds, which collectively added 17.8 t (US$1 billion, 14.6%), driven by China, India, and Japan. The strength of investment demand in these markets has been partially linked to opportunistic ‘dip buying’ at a time of gold price weakness, although stock market volatility was the primary driver in China in particular. This was reflected by the local gold-price discount in India and China turning positive during the quarter.
Price performance and trading volumes
Gold finished the month 3% lower at US$1691.1/oz. It held above US$1700/oz for most of the month, before falling back below that level in the final few days. By the end of March, gold was down over 10% year-to-date. Despite the downward move in price, gold’s 1-month implied volatility – reflecting market expectations of future fluctuations in the price – finished the month close to 14%, well below its historical realised average of 16% and the average level of 20% seen in 2020. The World Gold Council’s short-term price performance model suggests that the primary driver of gold’s decline during March, and throughout 1Q21, were higher interest rates, impacting the opportunity cost of holding gold (see Gold Market Commentary, March 2021).
Daily average trading volumes for gold fell 5% in March to US$162 billion from US$168 billion in February. While year-to-date volumes are 6% below the 2020 average of US$183 billion, they are still robust relative to the 2019 average of US$146 billion. The decrease in March was largely a function of lower over-the-counter volumes reported through the LBMA Trade Data. Net long positioning, via the recent Commitment of Traders (COT) report for gold COMEX futures, fell to 490 t, below the 2020 average net long level of 871 t and the lowest level since May 2019.
Regional flows
- North American funds had outflows of 68.5 t (-US$3.8 billion, -3.5% AUM).
- Holdings in European funds fell by 45.3 t (-US$2.5billion, -2.9%).
- Funds listed in Asia had net inflows of 7.2 t (US$427.2 million, +5.8%).
- Other regions had outflows of 0.9 t (-US$63.6 million, -1.8%).
Individual flows
- In North America, SPDR Gold Shares lost 56.1 t (-US$3.1 billion, -5.0%), followed by iShares Gold Trust, which lost 15.7 t (-US$855.2 million, -2.9%). SPDR Gold MiniShares had holdings rise by 1 t (US$55.7 million, 1.4%), while Graniteshares Gold Trust lost 0.8 t (-US$45.4 million, -4.2%). Recently launched CI Gold Bullion, a low-cost fund in Canada, had inflows of 5.8 t (US$318 million) during the month.
- In Europe, four UK-listed funds led outflows. Invesco Physical Gold lost 11.9 t (-US$656.8 million, -5.1%), iShares Physical Gold lost 7.6 t (-US$446.6 million, -3.4%), Gold Bullion Securities lost 6.7 t (-US$373.9 million, -9.2%), and WisdomTree Physical Gold lost 5.7 t (-US$313.7 million, -4.7%).
- In Asia, Bosera Gold added 2.5 t (US$140.4 million, 11.7%), while E Fund Gold and Huaan Yifu Gold each added 1.5 t and 1.3 t respectively.
Long-term trends
- Global AUM has fallen over 20% since the August 2020 high.
- The downward trend in overall global flows continues to be dominated by US and UK funds.
- Gold ETF flows have been largely correlated with gold prices and interest rates in recent months.
- Asian gold ETF holdings continue to grow assets despite other regions faltering.