Gold ETF inflows rise, but can falling yields drive a recovery?

Institutions and central banks are still accumulating gold as protection against fiscal risk, volatile sovereign bonds and geopolitical fragmentation, while high real yields continue to determine the price investors are willing to pay.

By Yazeed Abu Summaqa | @Yazeed Abu Summaqa Copied SHARE Gold ETF inflows rise, but can falling yields drive a recovery? linkedin whatsapp telegram reddit pocket email Gold ETFs attracted a record $31 billion during the third quarter.

Global ETF holdings reached an all-time high of 4,256 tonnes despite falling prices and higher bond yields.

Retail bar and coin demand declined 19%, showing that the institutional inflows were not part of a broad buying wave.

ETF inflows show that the marginal buyer has changed Physically backed gold ETFs added 211 tonnes during the third quarter, reversing the outflows recorded in the previous three months.

The Fed raised rates in September, Treasury yields moved higher and the dollar remained firm.

When investors become less confident that bonds will protect portfolios during an inflation or debt shock, higher yields can coexist with demand for gold.

Bond volatility became part of the reason to hold gold even while the level of yields limited the price investors would pay for it.

Their purchases can absorb supply through a correction, although they cannot prevent prices from responding to changes in yields and the dollar.

From Equiti Global