The latest data from the World Gold Council shows that the rise in bond yields continues to put pressure on precious metal markets. Investors are leaving gold-backed exchange-traded funds (ETFs).
According to the WGC report, gold ETFs have experienced capital outflows for the third consecutive month, down 46 tons, valued at $209 billion. In 2023, outflows from ETFs totaled 130 tons. Additionally, 44 tons of gold worth $2.7 billion are leaving North American markets.
On the other side of the Atlantic, European gold ETFs have been experiencing a decline for the third consecutive month. However, analysts noted that the pace of outflows in August was slightly slower than in July. In total, 8 tons of gold, equivalent to $315 million, left European funds.
Analysts speculate that weaker economic activity in Europe compared to the United States has created some regional demand for precious metals. The WGC said that compared to Western investors who continue to avoid gold, the East is actively entering the paper market.
According to the report, Asian fund inflows amounted to 7 tons, marking the sixth consecutive month of inflows in this region in this market segment. However, overall, demand in other regions for the current year remains negative at the level of 3 trillion (-US$140 million), with South Africa and Australia accounting for most of the losses.
Nevertheless, according to economists, gold prices remain fairly stable, considering that the yield on 10-year bonds has consistently remained above 4%, close to the highest level in over 15 years. The U.S. dollar index is at a multi-month high above 104.
According to Chantelle Schieven, head of research at Capitalight Research, given the dynamics of bond yields and the U.S. dollar exchange rate, gold prices should be $100 or even $200 lower than current prices.
Investments in gold will start to increase when investors realize that the economic slowdown will mean that the Federal Reserve will not be able to reduce inflation to the target rate of 2%.
The material has been provided by InstaForex Company – www.instaforex.com
The latest data from the World Gold Council shows that the rise in bond yields continues to put pressure on precious metal markets. Investors are leaving gold-backed exchange-traded funds (ETFs).
According to the WGC report, gold ETFs have experienced capital outflows for the third consecutive month, down 46 tons, valued at $209 billion. In 2023, outflows from ETFs totaled 130 tons. Additionally, 44 tons of gold worth $2.7 billion are leaving North American markets.
On the other side of the Atlantic, European gold ETFs have been experiencing a decline for the third consecutive month. However, analysts noted that the pace of outflows in August was slightly slower than in July. In total, 8 tons of gold, equivalent to $315 million, left European funds.
Analysts speculate that weaker economic activity in Europe compared to the United States has created some regional demand for precious metals. The WGC said that compared to Western investors who continue to avoid gold, the East is actively entering the paper market.
According to the report, Asian fund inflows amounted to 7 tons, marking the sixth consecutive month of inflows in this region in this market segment. However, overall, demand in other regions for the current year remains negative at the level of 3 trillion (-US$140 million), with South Africa and Australia accounting for most of the losses.
Nevertheless, according to economists, gold prices remain fairly stable, considering that the yield on 10-year bonds has consistently remained above 4%, close to the highest level in over 15 years. The U.S. dollar index is at a multi-month high above 104.
According to Chantelle Schieven, head of research at Capitalight Research, given the dynamics of bond yields and the U.S. dollar exchange rate, gold prices should be $100 or even $200 lower than current prices.
Investments in gold will start to increase when investors realize that the economic slowdown will mean that the Federal Reserve will not be able to reduce inflation to the target rate of 2%.
The material has been provided by InstaForex Company – www.instaforex.com
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