Gold ETF, $8.9 billion evaporated...Is its 'safe haven' reputation a thing of the past?

▲ Gold (Gold Bar)

With $8.9 billion flowing out of gold exchange-traded funds (ETFs) in just one month and gold prices plummeting by 11.7%, investors' confidence in gold as a representative safe-haven asset has been significantly shaken.

According to crypto media outlet BeInCrypto on July 9 (local time), global gold ETFs recorded capital outflows across all regions in June. North American products alone saw an outflow of $5.5 billion, and gold prices fell for four consecutive months, dropping by 11.7% in June alone.

A report by the World Gold Council showed that gold ETF assets under management decreased by 13% in one month to $526 billion. Gold holdings also fell by 74 tons to 4,047 tons. Amid the hawkish stance of the U.S. Federal Reserve (Fed) and the U.S.-Iran conflict fueling inflation concerns, rising real interest rates and a strong dollar increased the burden of holding gold.

North American gold ETFs recorded a net outflow of $7.7 billion in the first half of the year, marking their weakest start since 2013. In Europe, after the European Central Bank (ECB) raised interest rates by 0.25 percentage points for the first time since September 2023, $818 million flowed out of gold ETFs in June. Other regions also saw outflows of $262 million, with Australia decreasing by $197 million and South Africa by $36 million.

However, looking at the overall trend for the first half of the year, global gold ETFs recorded a net inflow of $8 billion. Asia attracted $12 billion in the first half, setting an all-time record, but in June, it experienced its worst monthly outflow of $2.3 billion, mainly from Chinese funds. India showed a contrasting trend, with investors putting money in, perceiving the drop in gold prices as a buying opportunity.

The World Gold Council stated, "Uncertainty surrounding geopolitics, economic growth, and financial markets continues. This environment supports demand for portfolio defense and can maintain interest in gold ETFs as a strategic safe-haven allocation tool." While $8.9 billion flowed out of global gold ETFs in June, the net inflow for the first half of the year remained at $8 billion.

[Key Article Summary]

-In June, $8.9 billion flowed out of global gold ETFs, with North American outflows alone reaching $5.5 billion.

-Gold ETF assets under management decreased by 13% to $526 billion, and gold holdings fell by 74 tons to 4,047 tons.

-Asia recorded a record net inflow of $12 billion in the first half, but $2.3 billion flowed out in June.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. This content should be interpreted for informational purposes only.*