Chinese profit-taking triggers record gold ETF outflows amid shift to equities

Chinese investors offloaded a record $2.91 billion from domestic gold exchange-traded funds (ETFs) in June, cashing in on previous gains as a booming stock market and a strengthening yuan diminished the allure of gold as a safe-haven asset. This significant withdrawal marked a reversal after China led global gold ETF inflows in the preceding four months.

The World Gold Council (WGC) reported that mainland Chinese funds were the primary reason for Asia's gold ETFs experiencing their worst single month on record, with outflows totaling $2.3 billion in June. This trend reflected an improvement in local investor risk appetite, leading them to shift towards higher-risk, higher-return assets. Major funds like Huaan Yifu Gold ETF saw outflows of approximately $1.14 billion, Guotai Gold ETF lost $352.1 million, and the E Fund Gold Tradable Open-end Securities Investment Fund experienced outflows of $334.2 million.

Despite the June downturn, Asian gold ETFs still managed to attract a net $12 billion in the first half of the year, marking the strongest first half on record for the region and making it the largest contributor to global inflows. Globally, gold ETFs saw positive net inflows of $8 billion during the first six months of the year, according to the WGC report.