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Gold ETF Outflows Hit $2.17B as Price Slide Accelerates
US and Chinese investors led $2.17B in gold ETF redemptions as prices fell 19% from record. Europe bought – watch for convergence or reversal.
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Investors in physically-backed gold exchange-traded funds turned sellers for the second straight week, with US and Chinese holders leading the exits. Data from the World Gold Council (WGC) shows net redemptions of $2.17 billion in the latest week, nearly double the $1.09 billion in inflows. The yellow metal’s slide below $4,600 an ounce – down 19% from the January 29 record of $5,608 – is accelerating the liquidation.
Year-to-date net investment in gold ETFs has shrunk to $18.46 billion from $19.54 billion the prior week. Traders now face a central question: is this a temporary profit-taking event or the start of a deeper unwind tied to shifting macro conditions?
What Triggered the Outflow Reversal
The trigger is gold’s price trajectory inverting. After a continuous rally from 2024 through late January – fuelled by US Federal Reserve rate-cut expectations, the US trade dispute, and a series of geopolitical crises – the Iran war broke out. Instead of safe-haven buying, gold began selling off on inflation fears, expectations of higher interest rates, and rising bond yields.
Key insight: The same forces that drove gold higher – uncertainty and low real rates – reversed when the conflict introduced stagflation risks. Markets priced in a hawkish Fed response to commodity price spikes, making gold less attractive relative to yield-bearing assets.
Price Action and ETF Flows
Gold traded at $4,560 an ounce on Monday, losing nearly 3% on the month. The WGC data covers the week gold first broke below $4,600. Historically, ETF outflows lag price moves by a week or two; last week’s $2.17 billion in redemptions may be only the first wave. If gold breaches $4,500, the next support is the 200-day moving average near $4,300. A break below that level could trigger forced liquidation from leveraged funds and additional ETF selling.
US and China Drove $1.26 Billion in Redemptions
Two regions accounted for the bulk of the outflows. US-based ETFs saw $635 million of redemptions, while Chinese funds shed $623 million. Together they contributed more than half the global total.
North America: Profit-Taking Zone
North American outflows hit $617.5 million last week. US investors have been net sellers year-to-date – negative $1.56 billion – reversing the accumulation pattern seen in late 2024. The region’s gold ETF holders are typically more sensitive to opportunity cost: with US bond yields rising, carrying gold’s negative yield becomes costlier.
Asia: Two Weeks of Red
The second consecutive week of negative inflows in Asia, particularly China, marks a shift. Chinese investors had been aggressive buyers throughout 2024, accumulating $8.20 billion year-to-date (down from $8.83 billion). The $629.4 million in Asian outflows last week suggests local retail sentiment has turned bearish.
What this means: Chinese gold ETF demand had been a major supporting factor. If that source of buying dries up, the physical premium in Shanghai may narrow, reducing the incentive for bullion imports and putting further pressure on global prices.