Global physically backed gold ETFs experienced a $1.8 billion outflow in May, ending a five-month streak of inflows, according to the World Gold Council.
North America accounted for the majority of the decline, with $1.5 billion withdrawn, followed by Asia with $489 million in outflows. In contrast, Europe saw a positive trend, attracting $225 million in new investments.
This marked the first monthly outflow since November last year and coincided with a slight drop in gold prices, resulting in a 1% decline in total assets under management (AUM) for global gold ETFs, which now stand at $374 billion.
Investor appetite shifted as the temporary easing of tariffs between the US and China boosted risk sentiment, leading to a rebound in equities and reduced demand for gold as a safe haven.
Gold prices finished May nearly unchanged, down 0.7% to $3,278 per ounce, despite some volatility during the month. Year-to-date, gold remains up approximately 26%.
The US Federal Reserve held interest rates steady in its May meeting but expressed caution amid ongoing inflation concerns and labor market uncertainties. This outlook has prompted markets to anticipate higher rates by the end of 2025.
Rising US Treasury yields have increased the opportunity cost of holding gold, contributing to the outflows from gold ETFs.
Trading volumes in the gold market averaged $363 billion per day in May, down 18% from the previous month but still significantly above the 2024 average of $233 billion per day.
Meanwhile, net long positions in COMEX gold futures totaled 551 tons by the end of May, reflecting a modest 3% decline month-over-month.
