For the fourth straight month, gold-backed ETFs increased their net gold holdings. Funds in every region reported net inflows of gold with Western funds leading the way.
Globally, gold-backed ETFs added 28.5 tons of gold to their holdings in August.
Due to a combination of rising gold prices and inflows of metal, global assets under management (AUM) held by gold-backed ETFs have increaed by 20 percent so far this year, coming in at $275 billion as of the end of August.
With the inflows of metal over the last four months, the year to date decline in ETF gold holding narrowed to 44 tons.
After finally turning positive in July, funds in North America led the way in August, adding 17.2 tons of gold to their holdings. In dollar terms, gold holdings increased by $1.4 billion. Declining Treasury yields and dollar weakness created tailwinds for gold last month and drove the yellow metal to new record highs.
According to the World Gold Council, the strong gold price performance led to exercises of in-the-money call options of major gold ETFs, creating sizable inflows at the expiry date.
European funds reported net gold inflows of 7.9 tons amounting to $362 million. Swiss and UK-based funds led inflows. The high likelihood of further interest rate cuts in the Eurozone boosted gold, along with safe haven buying.
According to the World Gold Council, "Inflows related to FX hedging products were notable, especially in Switzerland, amid the strengthening local currencies against the dollar."
Flows of gold into Asian funds slowed, but remained positive for the 18th straight months, coming in at 0.3 tons. In dollar terms, holdings grew by $32 million, the smallest increase since May 2023.
India continues to lead the way in gold inflows in the region and reported the strongest month since April 2019. The recent import duty reduction has lit a fire under the Indian gold market.
Japan also reported reported noteably inflows for the sixth straight month.
Funds in other regions added 3.2 tons. Australia has reported increased ETF gold holdings for three straight months.
Average over-the-counter (OTC) trading volumes rose by 5.9 percent month-on-month to $158 billion per day. In tonnage terms, OTC volumes charted 2 percent month-on-month increase.
Inflows of gold into ETFs can have a significant impact on the global gold market by pushing overall demand higher.
ETFs are a convenient way for investors to play the gold market, but owning ETF shares is not the same as holding physical gold.
A gold ETF is backed by a trust company that holds metal owned and stored by the trust. In most cases, investing in an ETF does not entitle you to any amount of physical gold. You own a share of the ETF, not gold itself.
ETFs are relatively liquid. You can buy or sell an ETF with a couple of mouse clicks. You don’t have to worry about transporting or storing metal. In a nutshell, it allows investors to play the gold market without buying full ounces of metal at the spot price.
Since you are just buying a number in a computer, you can easily trade your ETF shares for another stock or cash whenever you want, even multiple times on the same day. Many speculative investors take advantage of this liquidity.
But while a gold ETF is a convenient way to play the price of gold on the market, you don’t actually possess any gold. You have paper. And you don’t know for sure that the fund has all the gold either, especially when the fund sees inflows. In such a scenario, there have been difficulties or delays in obtaining physical metal.
Money Metals Exchange and its staff do not act as personal investment advisors for any specific individual. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. Readers and customers should be aware that, although our track record is excellent, investment markets have inherent risks and there can be no guarantee of future profits. Likewise, our past performance does not assure the same future. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing through Money Metals, you understand our company not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. This Website is provided “as is,” and Money Metals disclaims all warranties (express or implied) and any and all responsibility or liability for the accuracy, legality, reliability, or availability of any content on the Website.
Recommended Content
Editors’ Picks
![EUR/USD holds near 1.1100, looks to post small weekly gains](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-9377516_XtraSmall.jpg)
EUR/USD holds near 1.1100, looks to post small weekly gains
EUR/USD trades near 1.1100 in the American session on Friday. Although the risk-averse market atmosphere caps the pair's upside, dovish comments from Fed officials and the disappointing US jobs report help it hold its ground.
![GBP/USD retreats to 1.3150 area after post-NFP spike](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1178148633_XtraSmall.jpg)
GBP/USD retreats to 1.3150 area after post-NFP spike
GBP/USD turns south and declines to 1.3150 area after spiking to 1.3240 in the early American session. The negative shift seen in risk mood following the US labor market data for August helps the US Dollar stay resilient against its peers and weighs on the pair.
![Gold pulls away from near record highs, holds above $2,500](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/Gold_Bar_XAU_Precious_Metal_XtraSmall.jpg)
Gold pulls away from near record highs, holds above $2,500
Gold came within a touching distance of a new all-time high near $2,530 as US Treasury bond yields turned south on disappointing US jobs data. The US Dollar's resilience amid a souring risk mood, however, caused XAU/USD to erase its daily gains.
![Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoins-37949586_XtraSmall.jpg)
Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs
Bitcoin, Ethereum, and XRP hover around key support levels after registering a steep correction earlier this week. TRON network’s stablecoin activity hit new highs following the release of SunPump.
![Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/us-job-hunter-8793311_XtraSmall.jpg)
Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report
The Nonfarm Payrolls report is forecast to show that the US economy added 160,000 jobs in August, after creating 114,000 in July. The Unemployment Rate is likely to dip to 4.2% in the same period from July’s 4.3% reading.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.