Gold ETFs just made one of the most dramatic U-turns in recent memory. After recording net outflows of $12 billion in March, the world’s gold-backed exchange-traded funds attracted $6.6 billion in new capital in April.
What caused the reversal?
The weaker US dollar has made gold cheaper for overseas buyers. Falling oil prices provided further support. Central banks have been buying up gold for years, and sovereign buyers have built up physical gold reserves.
Gold’s overall picture remains noteworthy
Gold has gained about 210% since October 2023. Gold has recently experienced a 16.5% correction from its highs, which likely contributed to the surge in outflows in March.
Tokenized gold angles add a new wrinkle
While traditional gold ETFs are making a comeback, Binance’s gold futures contracts launched in January have seen cumulative trading volume of over $100 billion, with a daily high of $6.6 billion.
During the same period, stock ETFs gained $7.1 billion. This means that gold ETFs have performed roughly on par with stocks in terms of attracting new capital. Digital asset funds faced daily net outflows of $317 million.
