While gold prices remain above the $4,000 per ounce level, investor enthusiasm for gold exchange-traded funds (ETFs) has waned significantly. Latest monthly data shows that global gold ETFs experienced large-scale net outflows in June, pressured by rising real yields, a stronger U.S. dollar, and heightened expectations of Federal Reserve rate hikes. The single-month reduction reached 74.3 tons, involving funds close to $9 billion.
Looking at the overall performance for the first half of the year, despite the significant outflow in June, global gold ETFs still recorded a net inflow of 17.6 tons, valued at approximately $8 billion. This indicates that capital flow remained positive overall for the first six months. As of the end of June, total global gold ETF holdings stood at around 4,047 tons, with single-month net outflows totaling approximately $8.908 billion. During periods of market volatility, the gold price once fell below the 200-day moving average and briefly lost the $4,000 mark. However, recently, with weakening U.S. employment data and declining dollar and Treasury yields, gold futures have shown signs of stabilization and rebound, easing market concerns about further rate hikes.
Regionally, North American-listed gold ETFs became the main drag on the global market. In June, North American funds saw outflows of 42.4 tons, valued at approximately $5.5 billion. Market analysis points out that hawkish signals from the Fed and inflation concerns triggered by geopolitical conflicts have pushed up market expectations for future interest rates. For non-yielding assets like gold, rising interest rates directly increase holding costs, prompting some investors to shift funds to assets with higher yields or better liquidity.
European gold ETFs also faced pressure, but the outflow scale was relatively moderate, with holdings decreasing by 12.1 tons in June, valued at approximately $817 million. The European Central Bank's 25 basis point rate hike due to inflation concerns weakened some investors' interest in gold. Additionally, outflows from FX-hedged gold products in places like Switzerland exacerbated losses for European funds. In terms of the Asian market, gold ETFs saw outflows of 71.5 tons in June, valued at approximately $2.2 billion, mainly influenced by Chinese funds. As the Chinese stock market rose and local investor risk appetite improved, some funds withdrew from gold ETFs. Japanese funds also saw outflows due to the central bank's rate hike pushing up holding costs. In contrast, Indian gold ETFs saw contrarian inflows, indicating local investors remain bullish on gold prices and view pullbacks as buying opportunities.
The latest industry outlook suggests that gold ETF capital flows may improve in the second half of the year. Under a macro consensus scenario, gold performance may remain relatively stable, while uncertainties regarding geopolitics, economic growth, and financial markets have not subsided. Investor demand for portfolio protection may persist. Currently, $4,000 per ounce has become an important psychological level for the gold market. If gold prices can hold this level, it may attract bottom-fishing buyers to return. The trend of gold prices in the second half will continue to depend on the Fed's interest rate path, the U.S. dollar trend, and whether the Middle East situation deteriorates further. If real yields fall or geopolitical risks heat up, gold ETF capital flows are expected to turn positive again.
