June 2026 became a true test for investors preferring traditional safe-haven assets, as capital outflows from gold-backed exchange-traded funds reached nearly nine billion dollars. North American funds bore the brunt of this trend, losing about five and a half billion dollars, which marked the fourth consecutive month of declining prices for the precious metal, which lost almost twelve percent of its value during this period. This massive sell-off was triggered by a combination of macroeconomic and geopolitical factors: the hawkish rhetoric of the new Federal Reserve Chairman, Kevin Warsh, who made it clear that the regulator is in no hurry to ease monetary policy, combined with escalating tensions in the Middle East, forced market participants to reassess their portfolios. Against the backdrop of expectations for sustained high interest rates and a strengthening dollar, holding a non-yield-bearing asset became less attractive, prompting many investors to close out positions and shift funds into higher-yielding instruments.

The geography of capital outflows demonstrates the global nature of this trend, albeit with certain regional peculiarities. North American funds posted their worst start to a year since 2013, losing about $7.7 billion since the beginning of the year, while European investors withdrew over eight hundred million dollars more against the backdrop of the European Central Bank's decision to raise its key rate by twenty-five basis points. The rest of the world also did not stand aside: total outflows outside the three main regions amounted to more than two hundred and sixty million dollars, with the main blow falling on Australia and South Africa. As a result of such large-scale withdrawals, total assets under management (AUM) of gold ETFs shrank by thirteen percent, dropping to $526 billion, while physical metal holdings in fund depositories decreased by seventy-four tonnes. Analysts at the World Gold Council note that the current environment remains extremely turbulent, and although demand may stabilize in the short term, uncertainty in the global economy continues to dictate its own terms.

Despite such a bleak picture for the second quarter, the first half as a whole remained positive for the gold ETF industry thanks to unprecedented hype in the Asian region. Over the first six months, local investors poured a record twelve billion dollars into the funds, marking an absolute historical high, but even this optimistic trend cracked in June, when Asian funds saw more than two billion dollars leave, largely due to profit-taking in China. Nevertheless, Indian market participants demonstrated commendable foresight by deciding to use the summer price drop as an ideal opportunity to buy up the metal at discounted prices, which partially offset the overall decline in interest. In the end, despite a six percent drop in AUM due to the correction in the metal itself, physical gold holdings in global funds still increased by eighteen tonnes over the half-year. This fact clearly illustrates that the fundamental interest in the precious metal as a capital preservation tool has not disappeared; rather, the market has become much more selective and acutely responsive to any changes in the monetary policies of the world's leading central banks.

***

The material is prepared solely for informational purposes and does not constitute a financial advice or recommendation.