Key Takeaways:
Global physically backed gold exchange-traded funds recorded net outflows of $8.9 billion in June, the largest monthly withdrawal this year, as rising real yields and a strengthening dollar pushed investors to reduce bullion exposure, the World Gold Council said.
"The notable gold price pullback in the month served as a key driver for investors to dial back their allocation to gold ETFs," the council said in its July 8 report. "As new Fed chairperson Kevin Warsh sent hawkish signals and the US-Iran conflict pushed inflation fears up, expectations intensified of higher interest rates ahead."
Assets under management across global gold ETFs stood at $526 billion at the end of June, down 6 percent in the first half, mainly reflecting lower gold prices. Collective holdings, however, rose 18 metric tons to 4,047 tons during the period, the council said.
North America accounted for the largest share of June outflows at $5.5 billion, bringing first-half withdrawals to $7.7 billion — the weakest six-month performance since 2013. European funds lost $818 million in June, trimming first-half inflows to $3.2 billion, as the European Central Bank's 25-basis-point rate increase weighed on investor demand.
Asia Led First-Half Demand Despite Record June Exit
Asia recorded its largest monthly outflow on record in June at $2.3 billion, yet still delivered the strongest first half in its history with $12 billion in net inflows. Most of the June withdrawals came from Chinese funds as improving equity markets and lower gold prices reduced demand for the precious metal, according to the council. Japanese funds also experienced outflows after the Bank of Japan raised interest rates.
Indian investors bucked the regional trend, continuing to buy gold ETFs as they viewed the lower gold price as an opportunity to increase holdings, the council said.
Funds in other regions posted modest outflows of $262 million in June. Australian funds recorded withdrawals of $197 million, while South African funds lost $36 million, trimming year-to-date inflows.
Trading Volumes and Forward Outlook
Average daily trading volumes across the global gold market declined 13 percent month-on-month to $373 billion a day in June, reflecting lower activity in over-the-counter and exchange-traded markets. For the first half of 2026, average daily volumes reached a record $488 billion, supported by strong institutional participation and increased investor interest amid ongoing macroeconomic and geopolitical uncertainty.
The Federal Reserve's target rate sits at 3.75 percent after three consecutive cuts totaling 75 basis points since September 2025, with the rate on hold since December. Core PCE, the Fed's preferred inflation gauge, rose to 130.08 in May 2026, up 0.3 percent month-on-month and sitting in the 90.9th percentile of its 12-month range, according to Bureau of Economic Analysis data.
The 10-year TIPS real yield at 2.26 percent remains the key level for gold bulls. A rollover in real yields, combined with any Fed signal that the current pause is ending, could provide the next catalyst for bullion prices, which have held above $4,000 an ounce despite the June ETF liquidation.
The council said it expects North American gold ETF flows to stabilize in the second half, with continued geopolitical tensions, economic uncertainty and financial market risks potentially supporting demand for gold as a safe-haven asset.
This article is for informational purposes only and does not constitute investment advice.
