Global gold ETFs lost 114t in Q1 –total holdings declined 4% to 3,113t. Outflows measured US$6bn during the quarter, but accounting for the 8% Q1 price gain, total AUM rose 4% to US$222bn. A monthly breakdown shows that outflows slowed markedly, with March seeing a far smaller decline than January or February.

At a regional level, US- and European-listed ETFs both saw a 4% fall in holdings.

In volume terms, North America saw the largest tonnage decline – a function of this being the region with the largest and most liquid funds. The 68t decline in holdings was concentrated in January and February, whereas March witnessed a slight reversal, with modest monthly inflows of US$360mn (+5t).

For much of the quarter investors seemed to focus on the resilience of the US labour market and hotter-than-expected inflation prints, which pushed rate cut expectations further out. Equity market strength further diverted investor attention away from gold.

The mid-March turnaround was a reaction to the gold price rally, which triggered activity in the options market and sparked sizable inflows in the closing weeks of the quarter. A fall in both the dollar and Treasury yields early in the month helped spur the inflows, as did comments by the Federal Reserve that a strong labour market, by itself, would not be a reason to hold off on rate cuts.

US funds have seen only tentative inflows early in Q2, suggesting that the gold price rally has discouraged further significant outflows for now.