There was a net outflow of $1.6 billion in January 2023 and a decline of 0.8 per cent or 2 tonnes in total holding of gold to 3,446 tonnes in January 2023, according to data from the World Gold Council.
While the gold price was the strongest in January 2023 in a decade, up by 6.1 per cent, outflows in gold exchange-traded funds (ETFs) in Europe and Asia far outweighed the positive demand for gold in North America and the other region, according to the WGC report.
Does this signify that across territories, investors are booking profit from gold given that gold prices are at a near all-time high?
Here’s a look at the statistics for gold outflows vis-à-vis gold ETFs and the demand for gold.
According to the WGC report, overall, the collective gold ETF assets under management (AUM) increased by 5.3 per cent to $213 billion by January-end, 2023, on the back of rise in gold prices despite outflows in tonnage terms.
According to the report, funds in North America benefited from gold’s strong price performance as the dollar weakened and interest rates stabilised, leading to inflows of $572 million or 9 tonnes, up by 0.5 per cent.
“In addition, positioning in the gold ETF options market may have been another contributor as most inflows occurred around monthly gold ETF options’ expiry date,” the WGC report said.
In contrast, European funds saw outflows of $2.1 billion or 33 tonnes in January 2023, extending their losing streak to nine months.
“Rising rates as European central banks catch up to the Fed’s (US Federal Reserve’s) currency appreciation and strong local stock market performances may have diverted investors’ attention away from gold ETFs. This was particularly evident in the UK (-$1.3 billion, -21 tonnes), where gold ETFs accounted for the lion’s share of the region’s negative flows,” the report said.
In Europe, German funds saw huge losses.
According to the report, the average trading volume of gold across all markets was $156 billion per day in January, a significant rise of 37 per cent from December.
The average daily trading volumes of exchange-traded gold derivatives jumped by 58 per cent month-on-month (m-o-m) in January, followed by a 26 per cent increase in the OTC market and a 18 per cent rise in gold ETFs.
India And Asia
In Asia, Chinese funds witnessed outflows of $200 million or tonnes or 6.4 per cent in January 2023. The Asian outflows mainly came from Chinese funds, the WGC report said.
Huaan Yifu lost $148 million or 2 tonnes or 10 per cent, while Bosera Gold registered a loss of $40 million or 1 tonne or 5 per cent.
In India, the gold ETF fund flows in January was -45.3 tonnes, the demand was down by 0.7 per cent and demand for holdings was down by 1.73 per cent.
The Global Outflow
Globally, the inflow into North American funds was registered at $572 million dollars and in the other regions at $104 million.
In contrast, the outflows in European funds were recorded at $2.1 billion and in the Asian market at $246 million.
Funds in the UK and Germany led the global outflows.
