Gold ETF rush defies 8.5% gold price slide
The divergence appears to have been driven largely by futures selling rather than investors abandoning gold.
Investors poured a record $31 billion into gold-backed exchange-traded funds (ETFs) in September, despite gold's 8.5% decline to finish at $4,176 per ounce, according to the World Gold Council. This shows a significant divergence between ETF investors and futures traders. U.S.-listed funds contributed $689 million, while European funds added $452 million, with additional inflows in the previous week reaching $1.4 billion.
The council attributes the gold price decline in part to increased U.S. Treasury yields and a stronger U.S. dollar. However, ETF demand remained strong, with U.K.-listed funds attracting $7.5 billion in Q3, their highest quarterly intake on record. The U.K. inflows accounted for 54 tonnes, about three times the typical response to similar market conditions.
This suggests investors may increasingly view gold as a hedge against fiscal and bond-market risks rather than reacting to market shocks. Central bank purchases have also added 39 tonnes in August, a 70% increase from July, led by China, Poland, and Uzbekistan.
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