Inflows, which were $12.36 billion in the first quarter, were a negative $4.27 billion in the second quarter as gold assets under management dropped to $526.3 billion from $607.1 billion during the period.
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Investments in physically-backed gold exchange-traded funds (ETFs) turned negative in the second quarter this year, with over 50 per cent of the outflows witnessed in June, data from the World Gold Council (WGC) showed.
Inflows, which were $12.36 billion in the first quarter, were a negative $4.27 billion in the second quarter as gold assets under management dropped to $526.3 billion from $607.1 billion during the period.
Inflows into gold ETFs increased in the first quarter in sync with the precious metal soaring to a record high of $5,608 an ounce. Outflows zoomed in the second quarter as gold dropped below $4,000 per ounce in June amid fears of fallout from the US war with Iran.
Volatility may continue
Colin Shah, MD, Kama Jewelry, said bouts of volatility are being witnessed in asset classes due to movements in global interest rates and currency markets influenced by multiple factors.
“In the near term, the trend is likely to remain volatile as markets are rapidly recalibrating their risk appetite based on real-time developments,” he said.
Even in the first quarter, exits by investors were $41.77 billion against inflows of $54.13 billion. In the second quarter, outflows from ETFs were $30.01 billion, while inflows were $25.74 billion.
Amit Modak, director at PN Gadgil and Sons, told businessline in June that investors found the equity markets attractive, leading to the outflows.
US tops exits
Shah said that though ETF products have gained favour for convenience and lower entry cost, physical gold, currently witnessing weak demand, will continue to compete closely with ETF variants.
In the second quarter, demand in tonnage terms dropped by 40.8 tonnes, as holdings slipped to 4,047 tonnes. US investors continued to top exits from gold ETFs, taking away $5.6 billion in the second quarter. Chinese inventors encashed $2.9 billion, while Indian investments remained positive at $665 million.
Year-to-date, US investors have taken out $7.87 billion and French $551 million. Investments by the Chinese continue to be positive at $5.58 billion, while Indian inflows are $3.89 billion.
In the first quarter, US investors’ net investments were negative at $2.22 billion, while Chinese inflows were $8.49 billion and Indians $3.27 billion.
Overall, net investments in North America were negative at $5.64 billion, while Chinese outflows ensured the net inflows were negative for Asia at $1.63 billion during the quarter.
Inflows in the UK were positive at the end of the current quarter at $2.57 billion, helping investment stay positive in Europe at $3.17 billion.
Down 6% YTD
Gold, which was over $4,150 an ounce during the weekend, was quoted at $4,060 an ounce at 0900 hours IST. The yellow metal has shed over 1 per cent this week on concerns over renewed conflict in West Asia. The precious metal has declined 6 per cent year-to-date.
After peaking on January 29, gold has lost over 25 per cent till now on fears of inflation due to the US-Iran war, rising crude oil prices encouraging investors to switch over to fossil fuel counters, rising bond yields and the dollar, besides predictions of the US Fed raising interest rates.
Gold soared to a record high on hopes of interest rates dropping, geopolitical crises due to the Ukraine and Iran wars and tensions raised by US trade disputes with other countries, particularly China.
Published on July 9, 2026
