Gold-backed exchange-traded funds experienced outflows of 74.3 tonnes valued at nearly $9 billion in June, driven by hawkish Federal Reserve expectations that increased opportunity costs for holding gold, according to the World Gold Council's monthly ETF report. The liquidation occurred as new Fed Chair Warsh sent signals the market interpreted as hawkish and the US-Iran conflict intensified inflation fears, contributing to rising real yields and a strengthening dollar. Despite the June outflows, global gold ETFs ended the first half of the year with net inflows of 17.6 tonnes valued at $8 billion, though gold prices fell below their 200-day moving average and briefly dipped below $4,000 an ounce.
North American Funds Lead Global Outflows
North American-listed gold ETFs remained the biggest drag on the global market, with regional funds recording outflows of 42.4 tonnes last month valued at $5.5 billion. "As new Fed Chair Warsh sent hawkish -- as the market interpreted -- signals and the US-Iran conflict pushed inflation fears up, expectations intensified of higher interest rates ahead. This anticipation contributed to rising real yields and a strengthening dollar, pushing up investors' opportunity costs of holding gold," the World Gold Council analysts said in the report.
European and Asian Markets Record Regional Declines
European funds saw holdings fall by 12.1 tonnes valued at $817 million. The European Central Bank hiked rates by 25 basis points, the first time since September 2023, citing inflation concerns amid the ongoing US-Iran conflict. "This move may have deterred some investors from gold. We have also observed continued outflows from FX-hedged products listed in the region, mainly in Switzerland, amid local currency depreciation against the dollar, adding to European fund losses in June," the analysts said.
Asian-listed ETFs saw outflows of 71.5 tonnes valued at $2.2 billion. The June loss was mainly from Chinese funds, as local investor risk appetite continued to improve amid equity market gains and a weaker gold price. Japanese funds also saw outflows in the month as the Bank of Japan hiked rates, pushing up local investors' opportunity cost of holding gold. India bucked the trend, attracting inflows in the month as local investors remained optimistic about the gold price and viewed the dip as a buying opportunity. Despite the monthly volatility, analysts noted that Asian funds experienced their strongest first half of the year ever.
Gold Prices Fall Below Key Technical Levels
Gold saw significant bearish price action, with prices falling below their 200-day moving average and briefly dipping below $4,000 an ounce as investors fled the ETF market. Commodity analysts expect the gold market to stabilize as the months-long correction toward support at $4,000 creates attractive value.
World Gold Council Analysts Expect Second-Half Recovery
Analysts at the World Gold Council expect inflows to pick up in the second half of the year. "The macro consensus scenario in our 2026 Mid-Year Gold Outlook suggests relatively stable gold performance in H2, with potential catalysts possibly brewing a breakout in other scenarios. Meanwhile, uncertainties surrounding geopolitics, economic growth and financial markets linger. This backdrop may continue to support investor demand for portfolio protection and sustain interest in gold ETFs as a strategic safe-haven allocation," the analysts said.
FAQ
How much money flowed out of gold ETFs in June?
74.3 tonnes of gold valued at nearly $9 billion flowed out of the global ETF market in June, according to the World Gold Council's monthly ETF report. North American-listed gold ETFs saw the largest outflows at 42.4 tonnes valued at $5.5 billion.
Why did investors sell gold ETFs in June?
Investors sold gold ETFs as new Fed Chair Warsh sent hawkish signals and the US-Iran conflict intensified inflation fears, leading to expectations of higher interest rates. This anticipation contributed to rising real yields and a strengthening dollar, pushing up investors' opportunity costs of holding gold.
What did the European Central Bank do regarding interest rates?
The European Central Bank hiked rates by 25 basis points in June, the first time since September 2023, citing inflation concerns amid the ongoing US-Iran conflict. This move may have deterred some investors from gold, according to World Gold Council analysts.
