Mumbai, June 12, 2025 – In a reversal of recent trends, global gold exchange-traded funds (ETFs) witnessed net outflows of $1.8 billion in May 2025, ending a five-month streak of consistent inflows, the World Gold Council (WGC) has reported in its latest market update.

This marks the first monthly outflow since November 2024, highlighting a shift in investor sentiment as gold prices softened and market dynamics evolved.

Drop in AUM and Holdings

The outflows triggered a 1 percent decline in the total assets under management (AUM) of global gold ETFs. The total AUM dropped to $374 billion, down from $378 billion in April.

In terms of physical gold holdings, global ETFs shed 19 tonnes, bringing the cumulative total down to 3,541 tonnes by the end of May.

Regional Trends: North America and Asia Lead Outflows

According to the WGC note, the bulk of the withdrawals came from North American and Asian markets, suggesting a regional shift in investor allocation preferences. These markets, which had contributed significantly to inflows earlier in the year, reversed course due to changing economic conditions and risk factors.

The report highlights the impact of recent momentum trends, pointing to strong gold returns in April and ETF outflows in May as key reasons for the drag on performance. While tariff-related policy risks and inflation expectations were seen as positive drivers, lagged effects from the US dollar’s April decline also played a mixed role.

What Are Gold ETFs?

Gold ETFs are passively managed investment vehicles that invest in physical gold and aim to closely track the price of the precious metal. These funds allow investors to gain exposure to gold without having to buy or store the metal physically.

They are popular for their liquidity, transparency, and cost-efficiency, particularly during economic uncertainty, when gold is often viewed as a safe-haven asset.

Market Sentiment Turning?

The May outflows could signal a moderation in investor enthusiasm towards gold in the short term. Analysts believe that profit booking, expectations of central bank moves, and shifting inflation forecasts may have prompted some institutional and retail investors to rotate funds away from gold ETFs into other asset classes.

However, gold continues to enjoy long-term demand, especially amid geopolitical risks, currency fluctuations, and as a hedge against inflation.

India’s Position in Gold ETFs

While the report does not offer a country-specific breakdown, Indian gold ETFs are part of the global trend. India has seen steady retail and institutional interest in gold ETFs, driven by rising awareness, digital investment channels, and a historically strong cultural affinity towards gold.

Domestic trends often mirror global movements, especially in terms of AUM volatility, net flows, and investor response to price action.

Conclusion

The $1.8 billion net outflow in May marks a notable pause in the gold ETF rally seen over the last five months. With macroeconomic conditions still evolving, and central bank decisions expected in the coming weeks, the outlook for gold ETFs will likely depend on how investors reassess risk, currency movements, and inflation trends.

Market watchers will be closely monitoring the next few months to see whether this is a temporary dip or the start of a longer cooling period in gold-backed ETF investments.

The Upcoming IPOs in this week and coming weeks are Mayasheel Ventures, Eppeltone Engineers, Aten Papers, Patil Automation, Oswal Pumps, Samay Projects Services.

The Current active IPO are Jainik Power Cables, Monolithisch India.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.