Global physically backed gold exchange-traded funds (ETFs) recorded their ninth consecutive week of net inflows in the week ending September 18, with US-based investors accounting for more than half of the money coming in. Data from the World Gold Council (WGC) show total inflows of $4.24 billion, while redemptions amounted to $248 million. Net inflows over the period reached $3.99 billion.
US leads regional flows
US investors added $2.21 billion to gold ETFs during the week, contributing over 50% of the global total. Strong demand also came from the United Kingdom ($628.5 million), China ($606.7 million), France ($353.6 million) and Germany ($112.3 million). On a cumulative basis since the start of the year, China has attracted the most inflows at $9.244 billion, followed by the UK at $8.97 billion. The US has turned net positive only during the recent nine-week streak, with year-to-date inflows now standing at $4.36 billion. India, which recorded $4.21 billion in net inflows, has slipped to fourth place as US buying accelerated.
Renisha Chainani, Chief Research Officer at Augmont, noted that in India, digital gold purchases are running near ₹25 billion a month. She also said Indian ETF investments rose 67% in August to ₹2,600 crore. Total global gold ETF assets stood at $122.21 billion as of September 18, with cumulative outflows of $85.12 billion leaving net positive investments at $37.1 billion.
Gold price volatility and macro backdrop
The sustained inflows come against a backdrop of significant price swings. Gold traded above $4,000 an ounce in the first week of August, surged to $4,700, then eased. It is currently at $4,363 an ounce — down more than 6% month-on-month and up only 1% year-to-date. The metal hit a record high of $5,608 an ounce on January 29, driven by geopolitical tensions, expectations of US interest rate cuts, and trade disputes between the US and China. However, after the outbreak of the Iran War on February 28, gold lost over 20% of its value. Worries about inflation, a potential rate hike, rising bond yields, and investors pivoting to crude oil — which neared $100 a barrel — have weighed on the precious metal.
“Gold ended last week with modest gains, but prices remain sensitive to the US dollar and bond yields,” said Darshan Desai, CEO of Aspect Bullion & Refinery. Prithivraj Kothari, Managing Director at RiddiSiddhi Bullions Ltd and President of the India Bullion and Jewellers Association Ltd, said gold holds a bullish bias between $4,250 and $4,450 an ounce.
Key takeaways
- Gold ETF inflows extended to nine consecutive weeks, with total weekly inflows of $4.24 billion.
- US investors contributed $2.21 billion, more than half of the week’s inflows, and turned net positive for the year.
- China ($9.244 billion) and the UK ($8.97 billion) lead cumulative year-to-date inflows.
- Gold prices have fallen 20% since the start of the Iran War and remain sensitive to dollar strength and bond yields.
Common questions
Why are gold ETFs attracting inflows despite falling prices?
Investors may be hedging against geopolitical uncertainty and potential interest rate reversals. The metal remains within a broad range set after its January record, and some market participants see current levels as a buying opportunity.
What factors are most influencing gold prices right now?
The US dollar, bond yields, and inflation fears are key. A possible interest rate hike and the shift of capital into crude oil have put downward pressure on gold in recent weeks.
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