Commodity Investor AUM Increasing

According to analysis from RBC, total investor assets in the commodities sector continued to grow through April and May, indicating a notable trend to observe.

In April, net inflows totaled $6.7 billion, followed by $5.7 billion in May, with metals driving much of the activity in terms of price. There were mixed to neutral underlying flows during this two-month period, as noted by the bank.

Currently, total assets under management (AUM) are at $608.4 billion. Although this represents a month-on-month increase, it still falls short of elevating the year-to-date average for 2024 above the average for the full year of 2023. RBC commented that they believe AUM could stabilize further in 2024, particularly if precious metals begin to see consistently positive net flows.

The metals sector plays a crucial role, as approximately 86% of precious metals AUM, according to the bank’s data, is linked to gold. Consequently, gold’s performance significantly influences the overall movements in AUM for this sector.

Over much of the past year, gold holdings had experienced a steady decline. This trend was thought to arise because investors were attempting to maintain the notional value of their gold assets. However, as gold prices surged to new highs, selling became necessary.

RBC noted that this trend diverged from the longstanding relationship typically seen between price and flows in the gold market. The mostly stable high pricing in May contributed to a slowdown in outflows, potentially reaching a bottom. With prices facing challenges as May progressed into June, there has been a slight increase in gold holdings, according to RBC’s report from June 13.

The bank emphasized that if this trend persists, it could have positive implications for AUM data in the commodities space, marking it as a development worth monitoring.