Gold prices have reached new heights, but investors in gold exchange-traded funds (ETFs) are not seizing this opportunity. Data from S&P Global released on Thursday indicate that major global funds have experienced significant outflows since the start of the year.
Among the largest gold-related ETFs by assets under management, the VanEck Vectors Gold Miners ETF (GDX) with $13.26 billion and the SPDR Gold Trust ETF (GLD) with $61.71 billion, year-to-date flows have remained subdued. Both funds recorded positive flows in only two of the first five months of the year. Together, they have seen an outflow of $3.946 billion so far this year.
S&P Global reports that this trend is mirrored across most other funds, which have also seen substantial outflows since January. The agency attributes the recent surge in gold prices, approximately 13% year-to-date, to heightened geopolitical risks, ongoing conflicts, and increasing uncertainty about inflation trends in several major global economies. Central banks have reportedly driven this demand, pushing gold prices higher.
As central banks navigate a period of interest rate divergence, increased volatility in currency markets is expected. Interest rate movements can strengthen or weaken currencies, and gold is often used as a hedge against this risk. S&P Global suggests this might explain why ETF investors are not particularly enthusiastic about the recent rise in gold prices.
