China’s Gold ETFs Face Record Outflows As Investors Rotate Into Stocks: What’s Behind The Bullion Exodus?

Chinese investors are reportedly shifting away from gold-backed exchange-traded funds to equities, with outflows poised to reach a record high this month as the bullion price rally has stalled.

In July, China's four largest onshore gold-backed ETFs — Huaan Yifu, Bosera, E Fund, and Guotai — experienced a combined net outflow of approximately 3.2 billion yuan ($450 million), according to a Bloomberg News report. The CSI 300 Index, which tracks the top 300 stocks on the Shanghai and Shenzhen exchanges, rose by approximately 5.5%.

Steve Zhou, an analyst at Huaan Fund Management Co., reportedly said, some investors are booking profits from gold and rotating into equities to chase “stronger momentum.” He also told the news publication that retail investors are driving the outflows.

Retail sentiment on Stocktwits about the SPDR Gold Shares ETF (GLD) was in the ‘bullish’ territory at the time of writing. Spot gold prices ticked up on Wednesday as investors eagerly waited for the U.S. Federal Reserve’s key policy meeting.

Gold prices have rallied this year, aided by U.S. President Donald Trump’s tariffs, which have boosted safe-haven inflows and weakened the dollar, as well as geopolitical tensions.

The price rally has cooled off in recent weeks as Washington, D.C., has struck several trade deals with key allies, including the EU and Japan. However, Fidelity and Goldman Sachs still see room for a further spike in bullion prices, based on some key catalysts.

The stagnation in bullion prices has occurred at a time when investors have become increasingly confident in Chinese equities, as the government’s efforts to curb pricing wars and overcapacity have bolstered hopes for improvement in profitability. A trade truce with the U.S. has also come as an aide.

China is the biggest physical bullion market in the world. While the country’s ETFs are smaller compared with global counterparts, they offer local investors one of the easiest ways to get exposure to the precious metal.

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