Gold exchange traded funds (ETFs) have suffered the worst half-year (H1) losses in more than a decade.

From January to June this year, global gold ETFs lost $6.7 billion, making this year's H1 their worst since 2013, according to a report from the World Gold Council (WGC). 

Hefty outflows were recorded in some markets, particularly in Europe and North America, although Asia emerged as the only region with inflows.

However, gold ETFs' total assets under management (AUM) have gone up by 8.8% year to date, thanks to recent inflows and a substantial increase in the gold price.

Total holdings dropped by 120 tonnes (-3.9%) to 3,105 tonnes during the same period, well below the monthly high of 3,915 tonnes recorded in October 2020.

Top performer

Among the major markets, Asia registered inflows of $3.1 billion in the first half of the year, outpacing all other markets and the only region recording positive flows, as the weak non-USD currencies and gold’s strong performance in those currencies proved to be a huge draw for investors in the region.

Collective outflows in North America and Europe, however, were to the tune of $9.8 billion

“Western gold ETF investors did not react as anticipated to the rise in the gold price – which commonly drives up investment flows – amid a high level of interest rates and a more risk-on sentiment generated by the AI boom,” the report said.

June inflows

During the month of June, global gold ETFs attracted $1.4 billion in inflows, with all regions recording positive gains except for North America.

Funds in other regions recorded a small inflow of $37 million during the month, with Australia and South Africa taking the lead. Mild outflows were recorded in other regions.

Gold ETFs’ collective holdings also continued to rebound, while their total AUM remained stable at $233 billion.

(Writing by Cleofe Maceda; editing by Seban Scaria)