Gold-backed exchange-traded funds (ETFs) posted positive monthly inflows for the first time in a year in May. Gold demand in India was also up by 8 per cent in the January-March quarter of 2024, according to a recent report by the World Gold Council (WGC)
Total ETF holdings increased to 3,088 tonnes by the end of May 2024, indicating a surge of eight tonnes from April levels. In monetary terms, inflows totalled $529 million. These inflows and rising gold prices pushed the cumulative assets under management (AUMs) of ETFs to $234 billion.
However, no single variable stood out as a key driver in May, WGC said in its report. Though momentum and a weaker dollar were positive drivers, their impact was actually marginal. Strong over-the-counter buying, including those by central banks, was a notable contributor to recent gold returns, it added.
The report further said that physical holdings remained 8.2 per cent below the average of 3,363 tonnes recorded in 2023. Moreover, AUMs were boosted by the yellow metal reaching new record peaks around $2,450 per ounce last month.
Gold demand in India witnessed a significant rise of 8 per cent, reaching 136.6 tonnes in the January - March quarter (Q1) in 2024. The earlier high in the first quarter was supported by robust economic growth, despite gold prices reaching historic highs. The Reserve Bank of India (RBI) had purchased over 19 tonnes of gold during the initial quarter of FY 2024 (Q1-CY24 / Q4-FY24), surpassing the 16 tonnes it purchased throughout the entirety of 2023.
Overall, Asian ETF inflows remained strong in May, with funds enjoying positive flows for the fifteenth consecutive month. The continued inflow streak in Asia is the second-longest on record, the report added.
Physical holdings in Asia rose $399 million or five tonnes, taking the total to 172 tonnes. This surge drove AUMs to $14 billion. Additionally, AUM in Asian funds rose 41 per cent in 2024, which is the highest in history, with China as the main contributor, and Japan witnessing robust inflows.
The buying activity was once again dominated by China at $253 million. Key drivers of gold ETF demand in the country were local gold price rise, which refreshed its all-time high and continued weakness in the local currency.
“Although this marks the region’s smallest inflow since November 2023, Asia’s continued inflow streak is the second longest on record,” the report said.
