Gold exchange-traded funds (ETFs) continued to post positive capital flows during April 2023, amid recession fears that have strengthened the price of the precious metal.
In the fourth month of the year, gold ETFs registered capital inflows of 824 million dollars, while holdings in these instruments increased 15 tons, for a total of 3,459 tons, according to a report by the World Gold Council ( WGC, for its acronym in English).
“Continued gold price strength sustained positive flows into physically backed gold ETFs, albeit at a slower pace than in March. Declining yields (on Treasuries) and falling dollar pushed the April average gold price to the highest level in a year,” the WGC said in its April 2023 Gold ETF Flows report. .
In March, flows into gold ETFs totaled $1.9 billion, with demand for 32 tons of the precious metal.
The WGC explained that the slowdown in ETF flows and demand during April would be due to lower growth in the price of gold.
In April, the spot gold price rose 1.11% month-on-month, closing the month at $1,989.65 per troy ounce, according to Investing data. In March, the growth with respect to the previous month was 7.70%, going from 1,827.15 to 1,967.90 dollars.
In March, gold prices rallied strongly on growing demand due to the uncertainty caused by the collapse of two regional banks in the United States.
Ana Azuara, a Raw Materials analyst at Banco Base, explained that gold, due to its intrinsic value, is an asset in which investors have historically taken refuge in times of crisis and uncertainty.
The metal continued to trade high in April on the back of a weaker dollar and lower Treasury yields, although on a high basis for comparison, monthly growth was lower than in March.
Total assets under management (AUM) for gold ETFs closed April at a value of $221 billion.
The region in which the largest flow to gold ETFs was recorded in April was North America, with inflows of $984.3 million.
“Weaker-than-expected economic data (in the United States) worsened investor fears of recession, suppressing Treasury yields and raising demand for safe-haven gold,” the WGC report explains.
“The positive performance of the gold price during the month may also have contributed,” he added.
In contrast, Europe was the only region in which there were outflows in gold ETFs, given that, given the persistence of inflation in the euro area at high levels, investors anticipate further increases in interest rates.
