(Kitco News) - Although gold prices are holding support above $4,000 an ounce, June proved to be a difficult month as rising opportunity costs continued to push investors out of gold-backed exchange-traded funds, according to the latest report from the World Gold Council.
In its monthly ETF report, the WGC said that 74.3 tonnes of gold, valued at nearly $9 billion, flowed out of the ETF market last month. However, despite the ongoing liquidation, the global ETFs ended the first half of the year on a positive note, with net inflows of 17.6 tonnes, valued at $8 billion.
North American-listed gold ETFs remained the biggest drag on the global market. Regional funds saw 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 analysts said.
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.
Looking ahead, commodity analysts expect the gold market to stabilize as the months-long correction toward support at $4,000 creates attractive value.
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.
Meanwhile, across the Atlantic, European funds also saw a more modest decline, with holdings falling by 12.1 tonnes, valued at $817 million.
“The European Central Bank hiked rates by 25bps, 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.
Rounding out the global trend, Asian-listed ETFs saw outflows of 71.5 tonnes, valued at $2.2 billion. Despite the monthly volatility, analysts noted that Asian funds experienced their strongest first half of the year ever.
“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 buckled the trend, attracting inflows in the month as local investors remained optimistic about the gold price and viewed the dip as a buying opportunity,” the analysts said.
