Gold ETFs experience renewed capital inflows; Nomura: New York gold futures prices may rise back above $5,000

According to Nikkei Chinese, global gold ETFs (Exchange-Traded Funds) saw renewed capital inflows in April. In early April, the United States and Iran reached an agreement on a two-week ceasefire. As the upward momentum in crude oil futures prices temporarily slowed, concerns about runaway inflation eased, and interest rates appeared to stabilize, which seems to have prompted funds to flow back into gold ETFs. Although ETF capital inflows provide support to gold prices, overall gold futures trading in April remained almost flat, and the trend was clearly weak. Against a backdrop in which the outlook for the Middle East is still hard to predict, the market generally believes that “gold prices will continue to show unstable performance in the future.” Whether gold can regain its luster remains unclear.

Gold ETF trading statistics released on May 7 by the international gold research organization World Gold Council (WGC) show that in April, gold ETF capital inflows restarted across the world, including North America, Europe, and Asia. Measured by weight, the overall net outflow in March was about 84 tons, while in April it turned into a net inflow of about 45 tons. Measured by value, around $12 billion flowed out in March, and in April it shifted to a net inflow of about $6.6 billion.

Nomura Securities economist Takashi Takashima analyzed, “In April, after energy prices rose, they temporarily leveled off, inflation concerns eased, and long-term U.S. interest rates declined. Since gold itself does not generate interest, its investment appeal increases in a backdrop of falling interest rates, leading to buying.”

Takashima added, “As long as the Middle East situation cannot stabilize in mid-May, the market will continue to maintain an unstable trend.” The chief economist of Nomura Research Institute, Takeshi Ueno, said, “If, after the conflict between the United States and Iran ends, the trends of ‘de-Americanization’ and ‘de-dollarization’ accelerate further, then for the purpose of diversifying assets, gold may continue to be purchased, and the New York gold futures price could potentially rise back above $5,000.” However, he also pointed out, “At present, the market is essentially still driven by crude oil.”