Gold ETFs attracted $31 billion in a single quarter,
but gold prices fell 8.5%
The latest data released by the World Gold Council is well worth examining.
Global gold ETFs saw net inflows of $31 billion in the third quarter, setting a quarterly record.
In September alone, net inflows reached $10 billion. Global gold ETF holdings increased by 67 tonnes to 4,256 tonnes, also setting a new record.
Yet gold fell 8.5% in September, closing the month at $4,176.
Why did gold prices fall even as investors continued buying?
In September, the yield on 10-year U.S. Treasury bonds rose 53 basis points to 5.3%, while the U.S. Dollar Index gained about 2%.
Meanwhile, net positions held by managed funds on COMEX fell by 84 tonnes. Pressure from position reductions in the futures market offset the support from continued ETF buying.
This shows that there is a clear divergence in investment flows in the gold market right now.
Long-term investors are still increasing their gold holdings, but short-term traders, affected by high interest rates and a stronger dollar, are reducing their risk exposure.
My medium- to long-term outlook for gold has not changed much. But if U.S. Treasury yields stay above 5%, gold prices may need more time to absorb the pressure in the short term.
Rather than focusing solely on the amount of ETF inflows, it is now more important to watch how the yield on 10-year U.S. Treasury bonds moves.
$PAXG $XAU $XAUT
but gold prices fell 8.5%
The latest data released by the World Gold Council is well worth examining.
Global gold ETFs saw net inflows of $31 billion in the third quarter, setting a quarterly record.
In September alone, net inflows reached $10 billion. Global gold ETF holdings increased by 67 tonnes to 4,256 tonnes, also setting a new record.
Yet gold fell 8.5% in September, closing the month at $4,176.
Why did gold prices fall even as investors continued buying?
In September, the yield on 10-year U.S. Treasury bonds rose 53 basis points to 5.3%, while the U.S. Dollar Index gained about 2%.
Meanwhile, net positions held by managed funds on COMEX fell by 84 tonnes. Pressure from position reductions in the futures market offset the support from continued ETF buying.
This shows that there is a clear divergence in investment flows in the gold market right now.
Long-term investors are still increasing their gold holdings, but short-term traders, affected by high interest rates and a stronger dollar, are reducing their risk exposure.
My medium- to long-term outlook for gold has not changed much. But if U.S. Treasury yields stay above 5%, gold prices may need more time to absorb the pressure in the short term.
Rather than focusing solely on the amount of ETF inflows, it is now more important to watch how the yield on 10-year U.S. Treasury bonds moves.
$PAXG $XAU $XAUT