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  • BofA: Gold ETF flows turn positive in May

    Mon June 10 2024


    Analysts from Bank of America noted a significant inflow of gold ETFs in May, reversing the outflow trend that had been ongoing for the previous 11 months. However, with the gold price falling sharply after the US May Jobs report, it remains to be seen if ETF inflows will continue.

    According to data from the World Gold Council, gold ETF holdings saw their first monthly inflow in 12 months in May, amounting to $529 million or 8.2 tonnes. This inflow was primarily driven by European and Asian funds, with European inflows thought to have been influenced by expectations of a rate cut by the European Central Bank. Asian inflows were primarily led by Chinese demand. In contrast, North American gold ETF outflows are believed to have been influenced by hawkish Fed expectations.

    The price of gold experienced significant volatility last week. Initially, the yellow metal's price climbed 2% to $2,376 per ounce following a softer-than-anticipated ADP employment report, which showed a slowdown in private payrolls from 188k in April to 152k in May, falling short of the estimated 175k. However, this rise was short-lived.

    Gold prices then took a hit when news emerged that the People's Bank of China (PBoC) had paused its gold purchases in May, concluding an 18-month buying spree. This development placed considerable pressure on the gold price, as Chinese central bank buying has been seen as a significant driver of the recent gold rally.

    On Friday, US real rates soared following an exceptional non-farm payroll print, suggesting a sustained higher Fed Funds rate. As a result, gold ended the week at $2,294/oz, marking a 1.4% decline.

    Looking ahead to 2024, BofA analysts have named Agnico Eagle Mines (NYSE:AEM) and Pan American Silver (NYSE:PAAS) as top picks among North American Precious Metals, with both stocks outperforming the gold price and the S&P/TSX Global Gold Index. The analysts continue to recommend AEM and PAAS as top 2024 precious metal picks.