Asian investors continue to dominate the gold market with ETF demand surging in April
NEW YORK (May 9) Asian demand has dominated the physical gold market for the last two years, and now that trend has extended into the paper market, as demand for gold-backed exchange-traded funds (ETFs) has outpaced all other regions, according to the latest monthly data from the World Gold Council (WGC).
The report said that global holdings in gold-backed ETFs increased by 115 tonnes, valued at $11 billion, to a total of 3,561 tonnes. This marks the fifth consecutive month of net inflows, with holdings now at their highest level since August 2022. However, analysts at the WGC noted that total holdings remain 10% below the record highs seen in 2020.
“Asia led inflows, accounting for 65% of the net global total – their strongest month on record,” the analysts said. “North American demand was also sizable, while European flows flipped negative.”
In the regional breakdown, Asia-listed gold ETFs saw their holdings increase by 69.6 tonnes, valued at $7.31 billion, last month.
“The bulk of the demand came from China, marking the third consecutive month of inflows and the strongest on record for the region,” the analysts said. “The ongoing trade dispute with the U.S., which has raised fears of weaker growth, amplified equity volatility, and intensified expectations of local currency depreciation, contributed to the demand.”
The report also noted that trade-related geopolitical uncertainty supported gold ETF demand in Japan, which has now seen seven consecutive months of inflows.
North America-listed funds saw inflows of 44.2 tonnes, valued at $1.83 billion in April. WGC analysts cautioned that while North American investment demand may be volatile at higher prices, gold’s solid uptrend remains intact.
“Although flows moderated compared to February and March, this month marked the second strongest April on record,” the report said. “Near-term momentum may ebb and flow, but expectations for continued market volatility – driven by concerns such as future trade policy and inflation – should provide a level of support to flows over the medium to long term.”
European investment demand was the one weak spot in the gold market. Europe-listed funds saw outflows of 0.7 tonnes, valued at $807 million.
“The region witnessed healthy demand during most of April as the gold price rallied,” the analysts said. “Lower opportunity costs, fueled by another rate cut from the ECB and heightened expectations of a BoE reduction in early May, supported gold ETF buying. However, late-month gold price declines sparked investor selling – likely profit-taking – which erased earlier gains. Sharp stock market rebounds may have further reduced gold's appeal.”
Gold’s rally still in early innings
Looking ahead, analysts at the WGC said that although gold prices have seen significant gains this year – after hitting an all-time high of $3,500 last month – the precious metal still has upside potential, even amid increased volatility and profit-taking.
“Previous gold bull runs have coincided with significant inflows into gold ETFs. But there seems to be room to grow. For example, gold holdings by funds listed in Western markets are 575 tonnes (or 15%) below their record high,” the analysts said in a separate report on Thursday. “Furthermore, COMEX futures net longs, which typically represent the more speculative end of the investment spectrum, do not look overextended. They are currently near 570 tonnes – their lowest level in more than a year and well below their 2020 high of over 1,200 tonnes.”
The WGC said geopolitical trade uncertainty remains the top risk factor driving gold demand. Analysts noted that economic uncertainty and fears of a recession due to a global trade war account for around 10% to 15% of gold’s current price rally.
“Even if trade negotiations were to progress and conditions were to improve, we would not expect gold to completely reverse its risk-induced bump,” the analysts said. “For one, gold remains well bid despite some easing of trade tensions and the noteworthy rebound in the U.S. stock market since early April. In addition, investors – especially international ones – appear wary of the policies on which the Trump administration may concentrate next… and any others that may emerge over the following three and a half years.”
Looking beyond global trade uncertainty, the WGC said that global monetary policy also remains supportive of gold. Analysts noted that growing protectionist sentiment in the global economy continues to support inflation and slower economic growth, which will drive real yields higher, reducing gold’s opportunity cost as a non-yielding asset.
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