Investors Cool on Gold ETFs After Retreat from Record High Prices

After piling into commodity gold-exchange traded funds as the precious metal rocketed to repeated record highs throughout 2024, investors are taking a breather.

So far in December, investors have withdrawn more than $300 million from ETFs that hold physical gold. While a drop in the bucket compared with the roughly $127 billion in assets these funds have, this marks a change in investor behavior this year. From March through the end of November, they poured over $6 billion into these funds.

Gold’s 2024 Rally

Gold prices had been in the doldrums for much of the past four years. After going from about $1,500 to just over $2,000 in 2020 (when gold ETFs took in $30 billion), gold didn’t rise much above that level for the next few years. Gold ETFs saw withdrawals of $12 billion in 2021 and a total of $7 billion over the next two years.

It seemed 2024 would continue that exodus, with outflows of more than $4 billion in the first two months. But at the end of February, gold began a rally that took it to a record high in late October, just shy of $2,790 an ounce.

Gold Rally Draws ETF Investors

The big winner of the runup has been the $75 billion SPDR Gold Shares ETF GLD, which has taken in $3.6 billion of new money from investors, offsetting the $3.5 billion in outflows it saw in the first two months of the year.

After reaching a record price of $2,788 on Oct. 30, gold fell for the next two weeks, bottoming out halfway through November at $2,565, about 8% lower. Since then, the price has rebounded and sits at around $2,733, 2% off its high but much higher than the $2,060 it started with this year.

Gold remains up 30% this year, exceeding the 28.1% return from the broader market as measured by the Morningstar US Market Index. Equity precious metals funds, which hold shares of precious metals mining and production companies, are up 23.1%.

Gold Flows Fade as Rally Stalls

However, as the rally in gold stalled, investors tapped the brakes on putting money into gold ETFs. Flows were essentially flat in November, followed by outflows so far in December.

Under the hood, it’s a mixed picture for individual ETFs. While SPDR Gold Shares had $1.1 billion in outflows in November, the second-largest gold ETF, the $34 billion iShares Gold Trust ETF IAU, had $1.1 billion in inflows. For November overall, outflows across the 10 biggest gold commodity ETFs netted out to $34 million.

December has been a different story. Those 10 ETFs have seen $303 million in outflows as of Dec. 10, with SPDR Gold Shares continuing to be the biggest loser with $634 million in outflows. However, the $9.6 billion SPDR Gold Mini Shares ETF GLDM has garnered $285 million in inflows.