The global gold market is witnessing a turnaround as investment demand surged in June, marking a notable recovery, according to the latest report from the World Gold Council (WGC).
Analysts from the WGC reported that global gold-backed exchange-traded funds (ETFs) experienced their second consecutive month of inflows in June. Overall, global holdings increased by 17.5 tonnes, valued at $1.4 billion last month.
“Inflows were widespread, with all regions except North America seeing positive gains. Lower yields in key regions and weaknesses in non-dollar currencies enhanced gold’s appeal to local investors,” noted the analysts.
Despite two months of inflows, the market is still rebounding from a significant decline earlier in the year. Year-to-date, global gold ETFs have faced outflows totaling $6.7 billion, marking their weakest first half since 2013.
European investors have notably driven the resurgence in gold demand, supported by central bank easing policies. “Lower yields and political uncertainties in the UK and France contributed to substantial inflows in Europe,” the analysts explained. European-listed funds recorded inflows of 17.9 tonnes, valued at $1.42 billion.
Conversely, North American demand has been subdued, with ETFs experiencing outflows of 8.2 tonnes, valued at $573 million. “Strength in the dollar and a buoyant equity market have diverted attention from gold, despite declining Treasury yields,” the report highlighted. However, sporadic inflows amid geopolitical tensions partially offset the overall outflows.
Looking forward, market sentiment hinges significantly on the Federal Reserve’s monetary policy decisions, with expectations of a 70% likelihood of a rate cut in September potentially bolstering North American demand.
Meanwhile, Asian markets continue to display robust demand for gold, with Asian-listed funds recording inflows for the 16th consecutive month. China, in particular, saw significant inflows driven by economic uncertainties and currency depreciation. Japan also sustained its streak of monthly inflows, supported by currency movements.
Other regions saw modest inflows, underscoring the varied global dynamics influencing gold investment patterns.
The report underscores a cautiously optimistic outlook for the gold market, with investors closely monitoring economic indicators and central bank policies for further cues.
