Global gold ETFs experienced net outflows for the first time in five months, with selling occurring everywhere except Europe!

Global gold ETFs experienced a net outflow of $1.8 billion in May, ending a five-month influx of funds. Is this a healthy correction in the gold bull market, or the beginning of a trend reversal?

Data recently released by the World Gold Council shows that this is the first monthly net outflow from global gold ETFs since November 2024. Accompanied by a slight decline in gold prices, the total assets under management of global gold ETFs fell by 1% from their peak to $374 billion, with holdings decreasing by 19 tons to 3,541 tons.

Despite the outflow of funds, inflows into global gold ETFs have remained in the positive range of $30 billion so far in 2025, with total holdings increasing by 322 tons.

Trade Conflict Eases, North America Leads the Retreat

North America has become the main force behind this round of capital outflow. According to the World Gold Council report, gold ETFs in May saw a net outflow of $1.5 billion, ending the positive inflow trend since January.

The core logic behind this shift is clear: the temporary easing of trade conflicts has boosted investor risk appetite, and a strong rebound in the stock market has directly weakened the demand for gold as a safe haven.

Additionally, the Federal Reserve maintained interest rates at its May meeting, but the meeting minutes reflected a cautious stance regarding the persistence of inflation and risks in the labor market. As a result, the market expects interest rates to remain high until the end of 2025, pushing up U.S. Treasury yields and directly increasing the opportunity cost of holding gold.

However, the World Gold Council pointed out that while high U.S. Treasury yields have historically had a negative impact on gold ETF demand, the current situation may not be entirely pessimistic. Heightened concerns about stagflation could push investors back towards gold, especially with the "Big Beautiful" plan introduced by Trump and Moody's downgrade of U.S. sovereign credit, reigniting market concerns about the sustainability of U.S. debt.

Asia Sees Nearly $500 Million Outflow

In May, gold ETFs in Asia experienced an outflow of $480 million, marking the first monthly net outflow since November 2024.

Chinese investors led this outflow trend, as the easing of trade tensions and a rebound in the stock market significantly weakened safe-haven demand. Meanwhile, Japanese gold ETFs saw inflows for the eighth consecutive month in May, although the scale was modest.

Only Europe is Still Buying

Against the backdrop of global gold ETF capital outflows, Europe achieved a modest inflow of $225 million, becoming the only region with net inflows.

The buying momentum in Europe mainly comes from France, which has seen stable inflows over the past three months. This reflects a resonance of multiple structural factors: sluggish economic growth, weak consumer confidence, and the escalation of tariff threats from the Trump administration against Europe at the end of May. Deeper concerns also include increasing fiscal pressure and rising political instability.

In contrast, the outflow of funds from Germany may be related to the easing of global trade uncertainties—this indeed boosted investor risk appetite before Trump issued new tariff threats against Europe at the end of the month. Although the Bank of England cut interest rates, reaching a trade agreement with the U.S. reduced trade risks, similarly weakening gold ETF demand