Volkswacht Bodensee - Gold ETF flows turn negative after 13 weeks as bullion loses 4%

Investments in physically backed gold exchange-traded funds (ETFs) turned net negative after 13 weeks last week, with the yellow metal losing nearly four%, data from the World Gold Council (WGC) showed.

WGC data indicated investors across the world redeemed $3.01 billion, while investments were $1.80 billion. US investors led the redemption, encashing $1.7 billion last week, as gold fell below $4,000.

Worst week since June

“Gold posted its worst week since June. The sell-off came from oil, currency rates and forced selling. Houthi strikes on Saudi infrastructure pushed Brent above $116, which markets read as inflationary, lifting December hike odds to 78%,” said Renisha Chainani, Chief Research Officer at Augmont.

“Gold prices are under pressure due to a stronger dollar, rising bond yields and inflation concerns. The upcoming US Federal Reserve meeting will be important in determining the near-term price trend,” said Darshan Desai, CEO, Aspect Bullion & Refinery.

At 1930 hours on Monday, gold dropped to $3,995 an ounce, shedding the gains made earlier in the day.

“Gold continues to hold around $4,000 despite easing geopolitical tensions, supported by strong investment and central-bank demand, fiscal concerns and some moderation in Treasury yields,” said Manav Modi, Commodities Analyst, Motilal Oswal Financial Services Ltd.

UK leads inflows

Last week, apart from US investors, there were others too who exited gold ETFs, but the amount involved was much lower. UK led the positive inflows at $321.8 million, followed by Switzerland at $64.3 million, Germany at $45.8 million and China at $21.4 million.

Year-to-date, Chinese top the table, investing $10.43 billion, while the UK followed with inflows of $10.22 billion. Indians ranked third with inflows of $4.69 billion, though last week’s data were unavailable.

Other countries where investors continued to stay invested in gold ETFs were Switzerland $3.63 billion, the US $3.51 billion, Germany $2.47 billion, France $1.79 billion, Japan $1.06 billion and Hong Kong Special Administrative Region $1.01 billion.

Festival cushion

Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions Ltd and President of India Bullion and Jewellers Association Ltd, said central bank buying and Indian ETF inflows are offering support to the yellow metal. “Dhanteras and Diwali demand should cushion dips. We favour staggered buying near support ahead of the Fed decision on October 28,” he said.

Global factors will continue to play a key role in price movements, said Desai.

Elevated crude oil prices and expectations of a possible US rate hike continue to support the dollar, keeping bullion under pressure, said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Psychological barriers, ETFs, central banks buying, and overall sentiment before the US Fed meeting this week and the mid-term election next week are keeping market participants on edge, said Modi.

Down 25% from peak

Gold, which zoomed to a record high of $5,608 an ounce on January 29, has dropped over 25% since peaking, particularly after the Iran war broke out. Fears of inflation, investors switching to crude oil from precious metals, concerns over the global economy and hopes of bond yields rising have pegged back gold. It has lost nearly 7% year-to-date.

Gold rallied between 2024 and January 2026 on hopes of US Fed rate cuts, geopolitical tensions, and the trade war between the US and its other global partners.

G.Schmid--VB