Global physically backed gold ETFs recorded modest outflows of US$2 billion in May as investors largely stayed on the sidelines, with range-bound prices and renewed appetite for risk assets limiting demand, according to the World Gold Council (WGC), Mining Zimbabwe reports.
By Ryan Chigoche
The pullback followed a strong rebound in April and marked a slowdown rather than a reversal of sentiment. Year-to-date, global gold ETFs have still attracted nearly US$17 billion in net inflows.
The figures carry significance beyond financial markets. For gold-producing economies such as Zimbabwe, ETF flows serve as a useful gauge of global investor confidence in gold, often influencing price direction and market sentiment. Strong inflows can reinforce higher gold prices, boosting export earnings, royalties and tax revenues, while periods of weaker demand may temper price momentum. With mining remaining one of Zimbabwe’s most important economic pillars and gold its leading foreign currency earner, shifts in global investment demand are closely linked to the industry’s ability to generate growth, jobs and export receipts.
The trend is particularly relevant for Zimbabwe, which is targeting 50 tonnes of gold production in 2026 after achieving a record 46.7 tonnes last year. Therefore, sustained strength in global gold demand remains important for supporting prices and maximising returns from the country’s expanding production base.
Against that backdrop, May’s slowdown in ETF demand did little to alter the broader picture. The month’s outflows reduced total assets under management by 2% month-on-month to US$604 billion, while collective holdings slipped 0.4% to 4,121 tonnes. Despite the decline, holdings remain close to the record 4,176 tonnes reached in February.
North America led the retreat, posting US$1.1 billion in outflows. The WGC said investor activity has been subdued since gold prices began trading sideways after the March drawdown, suggesting many market participants are waiting for a clearer catalyst before increasing exposure.
The opportunity cost of holding gold has also risen amid a stronger US dollar, elevated interest rates and shifting expectations around future US monetary policy. At the same time, investors have rotated back into higher-risk assets, particularly technology stocks. Reflecting that shift, global technology ETFs recorded their strongest monthly inflows since early 2024, drawing capital away from traditional safe-haven assets such as gold.
Europe was the only region to register net inflows during the month, adding US$334 million. Positive demand in the United Kingdom and Germany outweighed weakness elsewhere. In the UK, political uncertainty and fiscal concerns supported safe-haven demand, while lower Gilt yields reduced the opportunity cost of holding gold. Germany experienced a similar trend.
Asia recorded its first monthly outflow since August 2025, shedding US$1.2 billion, driven almost entirely by China. A weaker local gold price, a stronger renminbi and continued optimism in equity markets weighed on demand. India also posted outflows of US$61 million, ending a 12-month streak of inflows as investors locked in profits.
Trading activity in the broader gold market remained resilient. Average daily trading volumes rose 3% month-on-month to US$424 billion, remaining 15% above the 2025 average. However, gold ETF trading volumes fell 26% to US$6 billion per day, dropping below the annual average.
The WGC noted that COMEX positioning remains broadly neutral, indicating investors are still waiting for a near-term catalyst. While short-term demand has cooled, the council said the longer-term fundamentals supporting gold remain intact.
