Gold-backed exchange-traded funds (ETFs) saw a decline in assets under management (AUMs) in February, according to the World Gold Council (WGC). The total AUMs shrank by $2.9 billion to $206.3 billion during the month, with physical holdings decreasing by 49 tonnes to 3,126 tonnes.
February marked the ninth consecutive month of ETF holdings reversing, with North America experiencing significant liquidations. Total holdings in North America fell by 37 tonnes to 1,570 tonnes, leading to a decline in AUMs by $2.4 billion to $103.3 billion.
The WGC attributed the outflows to factors such as a strong labor market, higher-than-expected inflation, and market expectations of interest rate hikes. This led to a rise in Treasury yields and the US dollar, impacting gold prices negatively.
European funds also saw outflows for the ninth consecutive month, with total holdings decreasing by $719 million in February. AUMs in Europe dropped to $89.1 billion, with physical holdings declining to 1,353 tonnes.
However, Asian nations experienced an increase in ETF holdings, particularly in China, where holdings rose by 3 tonnes to 144 tonnes. AUMs in Asia increased by $200 million to $9.9 billion, driven by investor interest in gold amid a weakening local currency and stable gold prices.
The WGC noted that despite the outflows in February, they were the lowest since October, indicating a potential shift in investor sentiment towards gold-backed ETFs.
