While May saw the largest monthly outflows since March 2021, total holdings remained 8% higher year-to-date (YTD) at 3,823 tonnes or $226 billion.
On the other hand, Indian gold ETFs witnessed small net inflows at 0.4 tonnes in May, primarily due to the macro backdrop of higher inflation and a depreciating rupee.
On Indian retail market, WGC in its report said that demand remained strong during the first three weeks of May due to robust Akshaya Tritiya sales, wedding demand and a lower base over last year.
Indian retail demand, however, became soft during the last week of the month due to a higher gold price and fewer auspicious marriage dates, the market development organization for the gold industry said.
“With improved demand, premia in the local market surged to $4-5/oz by the third week of the month compared to a discount of $7-10 per ounce at the end of April. Softness in retail demand and liquidation of bullion stocks by trade pushed the local market to a discount of $3-4 per ounce by the end of May," the council added.
On global markets, WGC said, “Momentum from ETF outflows also fuelled the move down to $1,800 per ounce mid-month. Gold swiftly recovered from that level – with a dollar pullback and lower US 10-year real yield lending support – but the rebound ran out of steam and gold closed the month hovering around $1,850."
Global gold fell 3.8% in May, leaving it just under 2% higher on year at $1,839.
According to WGC, strong bi-directional equity volatility failed to support gold prices as short-term momentum waned.
Looking forward, the council believes that gold price seasonality has shifted in recent years suggesting the historically strong late summer rally may come sooner than normal.
“Although current market conditions are unlike anything we’ve seen historically, continued equity weakness could very well spark a rally in the gold price," it wrote.
The council also highlighted that gold’s recent performance was a by-product of liquidity sourcing for beaten-up areas of the market, despite some worrying that gold might struggle if equity markets rally.
“In fact, in the few instances of stock market rallies over recent weeks, gold has also rallied most of the time. Additionally, we have found that, historically, gold maintains positive performance in most longer-term stock rallies," WGC added.
