Trading in the global gold market saw a significant decline of 26% in November, averaging $417 billion daily, down from a record high of $561 billion in October, according to the World Gold Council (WGC). Despite this drop, trading volumes remained substantially higher than the 2024 daily average of $232 billion. The WGC noted that reduced volatility in gold prices contributed to the slowdown in trading activity across all sectors during the month.
Over-the-counter (OTC) trading decreased by 24% month-on-month to $188 billion daily, primarily due to a 25% drop in LBMA (London Bullion Market Association) volumes, which averaged $169 billion per day. Meanwhile, Indian investors continued to show strong interest in physically-backed gold exchange-traded funds (ETFs) for their sixth consecutive month in November.
The WGC reported that exchange-traded volumes fell by 26% to $221 billion a day, likely influenced by the decline in gold price volatility. Global gold ETF trading activity plummeted 50% month-on-month, sinking to $8.4 billion a day from $17 billion in October. In terms of tonnage, global gold market liquidity averaged 3,167 tonnes per day, reflecting a 26% decline. All market segments experienced reduced trading activity, with LBMA OTC trading dropping 25% to 1,287 tonnes and COMEX by 24% to 1,129 tonnes daily, exerting downward pressure on prices.
Global gold ETF trading also cooled, down 50% to 63 tonnes per day. However, “Global physically backed gold ETFs registered their sixth consecutive monthly inflow, adding $5.2 billion in November. While flows narrowed from previous months, they remain well above the 2024 monthly average of $292 million,” the WGC noted. Total assets under management (AUM) for these funds reached $530 billion, marking a 5.4% increase in November and another month-end peak as inflows continued and gold prices remained robust.
Asian ETFs attracted $3.2 billion in November, maintaining a trend of inflows for the third month. Chinese investments led with $2.2 billion. The WGC observed that equity market weaknesses, rising gold prices, and geopolitical tensions spurred interest in gold ETFs in China and Japan. Additionally, China’s recent VAT reform may have further stimulated this interest among jewelry buyers looking to avoid additional taxes.
In India, investment in gold ETFs persisted for the sixth consecutive month, supported by favorable local prices. Investors in South Korea have also started to exhibit strong interest in gold as a hedge against stock market volatility, although the WGC has not yet captured this trend in its data. North American investments also continued their upward trajectory for the sixth month, with $1 billion added to inflows, albeit at a slower pace compared to previous months.
The upward trend in gold prices, which concluded the month with a 4.5% gain, was supported by intensifying investor expectations regarding a Federal Reserve interest rate cut, bolstered by softer inflation indicators and resurgent geopolitical risks amid rising tensions with Venezuela.
Nonetheless, investments faced headwinds from cooling investor expectations regarding a December rate cut from the Fed, influenced by strong economic data and hawkish Fed minutes and earlier easing of geopolitical tensions due to progress in Ukraine peace talks. Local investors may have opted to realize gains from gold ETFs amidst swings in equity markets, capitalizing on their liquidity and solid year-to-date performance, which limited new investments, the WGC assessed.
In Europe, investment trends shifted positively, with inflows totaling $978 million in November, driven by declines in equity markets and strength in gold prices in local currencies, particularly in the UK and Germany.
