Chinese profit-taking triggers record gold ETF outflows amid shift to equities
Global gold market trading volumes averaged a record US$488 billion per day during the first half of the year
Chinese investors pulled a record US$2.91 billion out of domestic gold exchange-traded funds (ETFs) in June, taking profits as a stock-market surge and a strong yuan dimmed the appeal of the safe-haven metal, according to the World Gold Council (WGC).
Mainland Chinese funds were the biggest drag on Asia’s gold ETFs in June, “as local investor risk appetite continued to improve”, prompting them to turn to higher risk, higher return assets, according to the findings of the council’s report unveiled on Wednesday. This subsequently compounded the weakness in gold price in renminbi terms.
This came after the country led global gold ETF inflows in the first four months of the year.
Huaan Yifu Gold ETF lost about US$1.14 billion in the month, while Guotai Gold ETF lost US$352.1 million and the E Fund Gold Tradable Open-end Securities Investment Fund saw US$334.2 million in outflows, its data showed.
The selling pushed Asia’s outflows to US$2.3 billion in June, the worst single month on record for the region.
Even so, Asian gold ETFs channelled a net US$12 billion into the metal in the first half of the year, the strongest first half on record for the region, and the biggest contributor to global inflows. Global gold ETF flows remained positive at US$8 billion in the first half, the report said.