Exchange-traded funds (ETFs) backed by physical gold endured accelerating outflows during September, latest figures from the World Gold Council (WGC) show.
Funds dedicated to the precious metal recorded their fourth consecutive net monthly outflow last month. Outflows totalling 59 tonnes and equivalent to $3.2 billion were reported, up from 46 tonnes and $2.5 billion in August.
Total assets under management (AUMs) in worldwide ETFs dropped to $198 billion by the end of the month, the WGC said, with values pulled even lower by a 4% decline in the gold price in September.
Global funds held 3,282 tonnes of the yellow metal at the end of September.
WGC data shows that gold ETFs suffered net outflows of 139 tonnes, or around $8 billion, in the third quarter. So far in 2023 global outflows stand at 189 tonnes or $11 billion.
North American and European holdings drop
In North America, gold ETFs reported outflows of $2.1 billion (or 35 tonnes) in September. This represents the fourth monthly slide in a row.
According to the WGC, “the combination of higher Treasury yields and a stronger dollar, which weighed on gold’s performance in the month, might have deterred investors from gold ETFs.”
The body said that while the Federal Reserve paused its rate raising programme, the central bank’s decision to raise its growth and interest rate forecasts “intensified investor expectation that rates will stay higher for longer, dimming interest in gold.”
Total holdings in North America clocked in at 1,648 tonnes at the close of the month, while AUM declined to $99 billion.
Gold ETFs in Europe also reported a net monthly outflow for the fourth successive month. Funds experienced a reversal of 28 tonnes, taking total holdings to 1,443 tonnes. AUMs meanwhile declined $1.4 billion to $87 billion.
The WGC commented that September was “a month in which the European Central Bank delivered its tenth consecutive rate hike and reiterated that rates will stay ‘at sufficiently restrictive levels for as long as necessary.’”
The council added that “while the Bank of England paused hiking, policymakers kept the possibility of further tightening on the table.” It noted too that the possibility of higher opportunity costs “may have caused the region’s gold ETFs to unwind further.”
Europe’s gold ETF outflows totalled 55 tonnes in the third quarter, WGC data showed, which was equivalent to $3 billion.
Asian ETFs report net inflows
However, Asian funds enjoyed their seventh consecutive monthly inflow in September. Net ETF inflows totalled 5 tonnes (or $299 million) during the month.
The WGC said that “China continued to drive the region’s inflow amid increasing promotional efforts from fund providers, the surging local gold price and continued weakness in local assets.”
Total holdings in Asia’s gold ETFs rose to 133 tonnes as of the end of September, while AUM edged up to $8.4 billion. For the quarter, net inflows of 13 tonnes or $860 million were recorded.
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