(Mike Maharrey, Money Metals News Service) Gold ETFs globally reported net inflows of gold for the sixth straight month, driven by a strong surge in Asian investment.
Globally, gold-backed funds reported a 38.5-tonne increase in gold holdings. The pace of metal inflows moderated from the torrid pace of the last two months but remained well above the 2024 monthly average. In fact, gold ETFs are on pace for their strongest year on record.
ETFs globally now hold 3,932 tonnes of gold, the highest month-end total on record.
Assets under management (AUM) by gold-backed funds increased by 5.4 percent to a month-end record of $530 billion.
American funds have driven inflows for the last several months, but that flipped in November, with Asian funds reporting the bulk of increased gold holdings.
ETFs based in Asia boosted their gold holdings by a net 23.6 tonnes, increasing AUM by $3.2 billion.
Chinese funds led the way, growing by $2.2 billion. Japanese funds also reported solid growth.
According to the World Gold Council (WGC), “Equity market weakness, a rebounding gold price and geopolitical tensions encouraged gold ETF investment in China and Japan.”
Chinese VAT policy changes may have also contributed to the increase in investor interest in gold in that country. According to the WGC, jewelry buyers with investment motives turned to gold ETFs to avoid additional taxes.
Meanwhile, Indian ETFs reported the sixth straight month of increased gold holdings.
Gold flows into North American funds slowed markedly in November but remained positive. North American ETFs added 7.3 tonnes of gold valued at $1 billion.
It was the sixth straight month of ETF gold inflows in North America.
According to the World Gold Council, three factors supported gold ETF investment last month.
- The upward-trending gold price ended the month with a 4.5 percent gain.
- Towards the end of the month, investor expectations of a Fed cut intensified, as softer inflation indicators provided reassurance.
- Geopolitical risks resurged amid rising U.S.-Venezuela tension.
Equity market swings created some headwinds for gold ETFs as investors took profits to cover losses in other sectors.
European funds flipped positive in November, reporting a 7.9-tonne increase in gold holdings valued at $978 million. Sagging equities and a surging gold price drew more investors into the gold market.
UK and German funds led the way. UK ETFs got a boost from a new budget that is expected to ease inflationary pressures, raising expectations that the Bank of England will deliver more rate cuts.
Funds in other regions, including Australia and Africa, reported modest gold outflows of -0.4 tonnes, with Australian inflows failing to offset outflows in South Africa.
ETFs are a convenient way for investors to play the gold market, but owning ETF shares is not the same as holding physical gold.
ETFs are relatively liquid. You can buy or sell an ETF with a couple of mouse clicks. You don’t have to worry about transporting or storing metal. In a nutshell, it allows investors to play the gold market without buying full ounces of metal at the spot price.
Since you are just buying a number in a computer, you can easily trade your ETF shares for another stock or cash whenever you want, even multiple times on the same day. Many speculative investors take advantage of this liquidity.
But while a gold ETF is a convenient way to play the price of gold on the market, you don’t actually possess any gold. You have paper. And you don’t know for sure that the fund has all the gold either, especially when the fund sees inflows. In such a scenario, there have been difficulties or delays in obtaining physical metal.
Gold Trading Volumes
After a record-setting October, gold trading volumes fell 26 percent to $417 billion per day, month-on-month, in November. This reflected lower price volatility as gold generally traded sideways throughout the month.
In tonnage terms, global gold market liquidity also fell by 26 percent month-on-month, averaging 3,167 tonnes per day in November.
Over-the-counter trading dipped by 24 percent to $188 billion per day.
Global gold ETF trading activity plunged 50 percent month-on-month to $8.4 billion per day. While a significant drop, it was still well above the 2024 average of $2.9 billion per day.
Data on COMEX money manager net longs has been delayed due to lingering government shutdown impacts. The last data showed a decline in net longs as of October 14.
Open interest trended up and down throughout the month, ending November at $179 billion, basically unchanged from the end-October level.
Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
