Global gold ETFs registered USD1.7 billion of outflows in June according to new data released by the World Gold Council, reflecting the second consecutive month of outflows, but down from the USD3.1 billion seen in May.
These recent flows push Q2 into net outflows of USD2 billion, but year-to-date net inflows remain positive at USD14.8 billion. Total holdings at the end of June stood at USD221.7 billion (3,792t), a 6 per cent increase on June 2021.
The WGC writes that despite the gloomy economic outlook for Europe, characterised by record inflation and rising sovereign borrowing costs, the European Central Bank has indicated it will raise interest rates in July – for the first time in more than a decade – which impacted sentiment.
In addition to publishing its June, Q2 2022 and H1 2022 ETF flows update, the World Gold Council also publishes its H2 2022 Outlook which analyses the challenging environment facing investors in the second half of the year given the need to navigate rising interest rates, high inflation and resurfacing geopolitical risks.
The World Gold Council expects that:
Rate hikes may create headwinds for gold, but that many of these hawkish policy expectations are priced in
Continued inflation and geopolitical risks will sustain demand for gold as a hedge
The underperformance of stocks and bonds in a potential stagflationary environment may also be positive for gold