Gold ETFs Record Outflows of 110 Tons in 2022 – World Gold Council


According to the World Gold Council, the amount of metal in gold-backed exchange-traded funds (ETFs) will fall by 110 tons by 2022.

Holdings in these financial instruments fell 3% year over year, the organization said Monday. This amounted to $3 billion in metal.

The WGC said the decline reflected “an interesting year for gold ETFs, which saw demand surge during the first four months — when geopolitical risk took center stage — before returning those gains steadily as aggressive rate hikes dominated the narrative.”

By the end of 2022, global gold ETFs will hold 3,473 metric tons of metal. Total assets under management were worth $203 billion.

Positions fell for the eighth consecutive month in December, the WGC said. However, it added that the pace of outflows continued to slow, with total holdings falling by four tons (or $534 million in value).

Outflow led through North America, Asia

The WGC said fund demand in North America and Asia fell the most in the past year.

ETFs in North America lost 75 tons of the yellow metal by 2022. This amounted to $3 billion and was driven by declines in the SPDR Gold Shares and iShares Gold Trust funds. These are the largest and most liquid funds on the continent.

The WGC said that “the region started the year strong, with collective demand of 188 tonnes between January and April.” But it added that “higher yields and a stronger dollar weighed heavily on gold in the months that followed.”

Asian ETFs witnessed an outflow of 21 tons in 2022, the agency noted, equivalent to $1 billion in material. It said a “substantial” fall in Chinese holdings was only partially offset by rising demand from Indian and Japanese funds.

The WGC said that “Unlike North America and Europe, Asian funds saw no increase in demand in the first few months of the year as higher local gold prices spurred profit-taking.” It noted that “this was particularly the case in China “where investors took a more tactical approach for much of 2022.”

Gold holdings in European funds fell by 15 tons on an annual basis in 2022.

More of the same?

Looking ahead to 2023, the WGC said that “gold’s performance will likely be determined by the trade-off between inflation and central bank intervention.”

Gold prices rose 0.1% last year as investors weighed inflation and hit decades highs in some regions and interest rates skyrocketed to curb price increases. Flight-to-safety metal ended the year just below $1,814 an ounce.

The WGC continued that “a mix of headwinds and tailwinds implies that gold’s performance over the next 12 months could be similar to 2022: stable with a positive trend.”

But it added that “the outlook remains highly uncertain, leaving room for the possibility of more extreme outcomes.”