Global Gold ETF investments rise in April. What is attracting investors?

According to the most recent data from the World Gold Council, exchange-traded funds (ETFs) backed by physical gold continued to experience inflows in April.While holdings climbed 15 tonnes, net inflows totaled US$824 million.

Having reached its second record high of US$2,048/oz on 13 April, gold managed to firm its footing around US$2,000/oz, an important psychological threshold.2 The gold price ended April with a modest gain of 0.1%, much softer than March (+9%) – a possible explanation for slower inflows during the month.

"Continued gold price strength sustained positive flows into physically-backed gold ETFs , albeit at a slower pace than March. Declining yields and a sliding dollar pushed April’s average gold price to the highest in a year, said the body in its report.

Global gold ETF total assets under management (AUM) increased 1% to US$221 billion by the end of April after two consecutive months of inflows. 3,459 tonnes of gold were held, up 15 tonnes. However, because to significant European outflows in the first two months of the year, gold ETF demand for the first four months of 2023 remained negative at -13 tonnes, a net outflow of US$654 million.

Regional highlights

According to the World Gold Council study, all regions experienced inflows besides Europe. In April (+US$984mn, +15t), North American funds continued to draw inflows, with the majority of funds seeing inflows. Unexpectedly poor economic data increased market concerns about a coming recession, lowering Treasury yields and boosting demand for gold as a safe haven. The rise in the price of gold over the course of the month may have also helped.

Inflows into Asian-listed funds were rather modest (+US$14mn, +0.1t). Chinese funds outflows were partially offset by inflows from Japan and India. The first four months of 2023 saw a slight outflow of US$35 million in Asian funds, primarily due to Chinese funds.

In April (-US$223mn, -0.7t), gold ETF flows in Europe again turned negative. Investors anticipate future rate hikes from local central banks, which may have decreased their interest in gold ETFs given the region's persistently high core inflation and financial markets' exposure to banking sector problems.