World Gold Council: Global Gold ETFs turned into net outflows in May, with Asia and North America leading the withdrawal efforts.

After experiencing a strong rebound in April, the global gold ETF market quickly cooled down in May. According to the latest report released by the World Gold Council on June 4, global physical gold ETFs recorded a net outflow of $2 billion in May, marking a significant reversal of recent fund flows. As a result, the total assets under management of global gold ETFs fell by 2% month-on-month to $604 billion, with collective holdings slightly dropping by 0.4% to 4,121 tons, still slightly below the historical high of 4,176 tons set on February 27 this year. The outflow of funds this time was mainly driven by Asia and North America, with outflows of $1.2 billion and $1.1 billion respectively. Europe was the only region to record a net inflow, attracting $334 million in that month. Despite the net outflow in a single month, the fund flows of global gold ETFs since the beginning of the year remain positive, with cumulative net inflows approaching $17 billion. With gold prices trading sideways and risk appetite rising, investors are taking a wait-and-see approach. In May, gold prices fluctuated within a range, lacking clear directional catalysts, leading many investors to stay on the sidelines. At the same time, risk assets such as technology stocks attracted funds once again, with global technology ETFs recording their largest monthly net inflow since the beginning of 2024, leaving gold ETFs at a disadvantage in asset allocation competition. The World Gold Council pointed out that as gold and other macro consensus trades were cashed out in the first quarter, some investors who missed the uptrend or needed to catch up with benchmark performance shifted their funds back to cyclical sectors such as technology. Currently, the market's response to the ongoing escalation of tensions in the Middle East has been relatively muted, and safe-haven demand has yet to provide effective support. North America: Rising opportunity costs suppress demand In North America, there was a slight shift to negative in May, with a net outflow of $1.1 billion. The report indicates that since gold prices entered a consolidation phase after a pullback in March, fund flows in the region have remained sluggish, indicating that investors are waiting for clearer entry signals. In addition to price factors, the opportunity costs of holding gold are also rising - a stronger dollar, high interest rates, and adjustments in market expectations for future Fed rate cuts are all constraints on gold demand. At the same time, inflation concerns arising from the U.S.-Iran conflict have added uncertainty to the outlook for interest rates, leading some market participants to believe that the Fed may need to maintain a restrictive monetary policy stance for a longer period. Asia: China leads outflows, India ends consecutive inflows Asian funds recorded their first monthly net outflow since August 2025, totaling $1.2 billion, with almost all of the decrease coming from the Chinese market. The report shows that weakening gold prices in China, a strengthening Renminbi, and ongoing optimism in the stock market have collectively suppressed local demand for gold ETFs. The Indian market also saw outflows, totaling $61 million, ending a record of twelve consecutive months of net inflows. It is noteworthy that most of India's outflows in May occurred after the announcement of an increase in import tariffs, as investors took advantage of a rise in domestic gold prices to cash out profits. Europe: Safe-haven demand and falling bond yields provide support Europe was the only region to record a net inflow in May, attracting $334 million, mainly contributed by the UK and Germany, with inflows in both countries sufficient to offset weakness in other markets. In the UK, political uncertainty and concerns about the government's fiscal situation supported safe-haven demand; in the latter half of the month, soft inflation data combined with a drop in oil prices pushed UK government bond yields lower, reducing the opportunity costs of holding gold and further boosting local ETF demand. The German market followed a similar logic - a drop in oil prices alleviated concerns about further tightening of policy by the European Central Bank, leading to lower German government bond yields and providing support for gold demand. In contrast, foreign exchange hedging products primarily concentrated in Switzerland saw outflows due to the strengthening of the local currency against the US dollar. Market liquidity remains high Despite the shift to negative fund flows, overall market liquidity in the gold market remains stable. The average daily trading volume in the gold market in May rose slightly to $424 billion, continuing to exceed the full-year average level in 2025, indicating that market trading activity has not significantly contracted despite the outflow of funds from ETFs.