(Kitco News) - Donald Trump’s election victory and focus on his "America First" policies, which support a stronger U.S. economy and dollar, prompted global gold investors to reduce their exposure to the precious metal.
However, according to the latest report from the World Gold Council (WGC), North American investors continued to buy gold-backed Exchange-Traded Funds (ETFs) last month.
In its monthly ETF flows report, the WGC noted that the global gold market experienced significant liquidation, with 28.6 tonnes of gold worth $2.1 billion flowing out of the ETF market in November.
Analysts observed that Europe bore the brunt of these global losses. European-listed funds saw outflows of 26.3 tonnes, valued at $1.9 billion. This marked the first month of net outflows in the region since April.
“The euro and pound continue to experience weakness due to poor economic data and the dollar reaching a new year-to-date high. Similar to trends observed in prior months, this dynamic has led to outflows related to FX hedging products,” the analysts said in the report.
At the same time, they noted that stubborn inflation has created uncertainty around the European Central Bank’s monetary policy and its current easing cycle.
The North American market was the only region of strength for gold last month, as funds saw inflows of 0.8 tonnes, valued at $79 million.
“Despite aggressive risk-on positioning after the U.S. election outcome, which placed pressure on gold prices, the region still reported inflows primarily due to increased Canadian demand,” the analysts said. “The U.S. faced outflows during the first half of the month but experienced a rebound in inflows toward month-end as the market began pricing in a weaker dollar and lower yields following Scott Bessent’s nomination as U.S. Treasury Secretary.”
The sharp selloff in gold at the start of the month, following the U.S. election, was also too much for Asian investors. The WGC reported that Asian-listed funds saw outflows of 2.2 tonnes, valued at $145 million. This shift in the marketplace ended 20 consecutive months of inflows.
“China dominated outflows as a notable local gold price drop dimmed investor interest. Additionally, the equity market, despite its volatility, continued to divert attention away from gold,” the analysts said.
The WGC noted that Indian funds saw inflows due to growing bullish sentiment among consumers.
Although the gold market has been fairly volatile in recent weeks, WGC analysts see signs of stabilization. Recently, the market has managed to hold critical support around $2,600 an ounce.
“We believe demand has found a floor of support due to the expectation for lower yields, continued heightened geopolitical risk, and uncertainty around the implementation of future policy shifts and their global impact under the Trump administration,” they said.
