Outflows from gold ETFs slowed in March

Spot gold prices have been hitting record highs for the last eight sessions despite months of outflows from gold ETFs, which store bullion for investors and remain a crucial part of global investment demand for the precious metal.

“Flows in North America flipped back to positive for the first time in 2024. Asia and other regions also capped inflows. But these were offset by European losses,” the WGC said in a research note on Tuesday.

Global gold ETFs saw outflows of $823 million in March, down from an outflow of $2.9 billion in February and a nine-month average of $2.4 billion, the WGC said.

Their collective holdings fell by 14 metric tonnes by the end of March to 3,112 tonnes, the lowest level since February 2020. In February 2024, the holdings fell by 49 tons.

Gold’s April rally came on top of its 9.3% jump in March and was triggered by high demand for derivatives and options, safe-haven demand amid geopolitical risks, an uncertain political situation inside some countries and demand from central banks.

Meanwhile, gold ETFs saw three consecutive years of outflows with 244.4 tonnes of decline in 2023 amid high interest rates. Some analysts expect that the ETFs could start seeing inflows of non-yielding gold once the US Federal Reserve cuts rates.

“This is a notable, eye-catching rally in the gold price,” Krishan Gopaul, WGC senior EMEA analyst, told Reuters. “There could be room for this run to continue if the gold ETFs start to see significant inflows.”