Net investments in physically-backed gold exchange-traded funds (ETFs) turned positive last week after three weeks of continuous outflows, according to data from the World Gold Council (WGC). Investments reached $1.79 billion while outflows were $1.18 billion, resulting in a net inflow of $0.61 billion. This marked a significant reversal from the previous three-week period of negative flows, indicating renewed investor interest in gold ETFs.
The investment recovery was primarily driven by North American investors, led by the US, who invested $0.83 billion in gold ETFs. In contrast, Asian investors, particularly those in China, chose to exit the funds, with Chinese outflows totaling $0.2 million. US investments specifically reached $792.8 million, while UK investments were $43.4 million. France and Canada also saw positive inflows of $73.2 million and $32.1 million respectively, as reported by the World Gold Council.
Investors returned to gold ETFs following a significant crash in equity markets, with gold prices dropping 19% since peaking at $5,608 per ounce on January 29. Current gold prices are trading at $4,560.39 per ounce after hitting a more than one-month low on Monday, with US gold futures for June delivery gaining 0.1% to $4,563.50. The precious metal's decline was attributed to the Iran war that broke out on February 28, along with fears of inflation, economic slowdown, rising bank interest rates, and increased bond yields. However, recent developments show oil prices falling more than 2%, easing some inflation fears that had previously triggered a rout in global bond markets.
Year-to-date net inflows into gold ETFs reached $19.54 billion, up from $18.9 billion a week ago, according to World Gold Council data. Total investments for the year were $70.81 billion compared to $69.02 billion previously, while outflows decreased to $51.27 billion from $50.09 billion. US net investments were $925.2 million compared to $1.72 billion a week ago, while UK investments increased to $2.04 billion and Switzerland saw inflows of $1.90 billion.
China and India continue to lead investment flows into gold ETFs, with Chinese inflows in Beijing totaling $8.83 billion and Indian investments at $3.55 billion. Japanese investments increased to $1.26 billion, while South Korean inflows were $0.89 billion. Other notable contributors included Hong Kong with $0.93 billion in total inflows, Singapore at $0.27 billion, and Canada contributing $0.46 billion. The precious metal's rally since 2024 was driven by hopes of US Fed rate cuts, US trade disputes, and geopolitical crises, but the Iran war has since changed market outlook, as reported by the World Gold Council.
