Inflows into gold ETFs turned negative after 13 weeks as the yellow metal fell 4% last week

What happened

Investments in physically backed gold exchange-traded funds turned negative after 13 weeks, as World Gold Council data showed worldwide redemptions of $3.01 billion and US investors redeemed $1.7 billion, with gold falling nearly four per cent and dropping below $4,000 at one point.

Confirmed

Global impact / market context

Gold ETFs are funds that hold physical gold and trade like shares. Outflows mean investors pulled money out, which can force fund managers to sell gold and add price pressure, while hurting revenue for asset managers that earn fees on fund size.

Analyst inference

Higher oil prices, a stronger dollar and rising bond yields reduced gold's appeal because gold pays no interest, making yield-paying assets more attractive. Traders also priced a higher chance of a December rate hike, which tends to weigh on gold further.

Analyst inference

What to watch

1. The upcoming US Federal Reserve meeting, which analysts say will be important in determining the near-term price trend for gold. Confirmed
2. Watch whether gold ETFs attract new money again after the $3.01 billion redemption, since continued outflows mean more gold selling by fund managers. Proposed
3. Track oil prices and the dollar: Houthi strikes on Saudi infrastructure pushed Brent above $116, and continued gains could keep inflation worries and rate-hike odds high. Analyst inference

Evidence

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