In January, global gold exchange-traded funds (ETFs) backed by physical gold saw net inflows of $3 billion due to political uncertainties in Europe and a weak equities market in the Indian subcontinent. The World Gold Council (WGC) reported that European funds were the main drivers of these inflows, adding $3.4 billion in January, the highest since March 22. Indian ETFs also experienced record inflows of $400 million during the month.
The total asset under management (AUM) of ETFs reached $294 billion by the end of January, marking another month-end record, with collective holdings rebounding by 34 tonnes. Asian funds added $57 million in January, primarily driven by the record inflows in Indian funds as investors redirected cash to gold amid ongoing global uncertainty and weakness in domestic equity markets.
However, China saw notable outflows as stronger-than-expected Q4 and 2024 GDP growth raised investor risk appetite and limited expectations of future rate cuts, supporting the local currency. Political uncertainties in Europe, particularly in the UK and Germany, contributed to higher safe-haven demand and drew local investors to gold ETFs.
In North America, ETF outflows continued for the second consecutive month, with funds losing $499 million in January. Despite increased activity around President Trump’s inauguration and subsequent news surrounding tariffs, rates, and the dollar, flows quickly reversed as investors likely captured profits amid a record-level gold price and shifts in positioning.
The WGC noted that the “rattled” equity market, particularly tech stock selloffs related to AI buzz, and the record-breaking performance of the gold price attracted investor attention. Gold trading volumes averaged $264 billion/day in January, 20% higher month-on-month, mainly attributed to surging volumes at COMEX. Total net longs of COMEX’s gold futures ended January at 952 tonnes, a 25% increase month-on-month, driven by increased long positioning due to gold price strength and tariff-related fears.
Overall, gold ETFs in other regions saw inflows of $66 million, with increased trading volumes in the OTC market and global gold ETFs. It is clear that political uncertainties and weak equities markets continue to drive investor interest in gold as a safe-haven asset.
