European gold funds reported inflows after a 10-month run of outflows, with $927 million in sales in March, the World Gold Council has revealed.
Despite March inflows, European funds reported net outflows of $2.4 billion during the first quarter of 2023, representing the bulk of global outflows.
It marked the fourth consecutive quarter of negative demand and net outflows for global gold ETFs.
“Poor stock market performance, systemic risk fears from the banking crisis and the 6% gold price rise in the euro helped gold ETF demand in the month. But in Q1, European gold ETF flows remained negative,” the trade body noted.
“Continued large rate hikes from the European Central Bank during the quarter may have deterred gold ETF investors.”
Strong global flows of $1.9 billion in March were aided by lower yields on sovereign debt, a weaker US dollar and safe-haven buying fuelled by the banking industry crisis, according to the World Gold Council, as the gold price rose by 9%.
The World Gold Council noted that investors “flocked to gold in bulk after 12 March” following the collapse of Silicon Valley bank.
The best-selling European gold fund was the iShares Physical Gold ETC, which saw inflows of $1.1 billion. The worst-selling was the Wisdom Tree Physical Swiss Gold, with an outflow of $175 million.
Global gold ETF total assets under management (AUM) rose 10% in March to $220 billion, the highest level for eight months, aided by inflows and the gold price appreciation.
However, inflows were not enough to reverse negative flows reported in January and February, resulting in a total net outflow of $1.5 billion during the first quarter of 2023.
Current AUM is 9% lower than the record high of $241 billion reported in March 2022.
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