Gold's Physical Buyers and Futures Traders Pull in Opposite Directions

Gold ETFs took in $10 billion, or 67 tonnes, in September, but COMEX futures selling pushed the metal down more than 8% for the month.

Gold ETFs absorbed $10 billion globally in September, equivalent to 67 tonnes, yet the metal still finished the month sharply lower in dollar terms — a divergence the World Gold Council attributes squarely to derivatives activity rather than any cooling of investor appetite.

The scale of the futures unwind was striking. On the COMEX, speculative funds slashed their Managed Money positions by 84 tonnes equivalent, while the Spreading category contracted by 156 tonnes equivalent. Those shifts overwhelmed the buying in physically backed products and dragged the gold price down by more than 8% over the month, even as ETF inflows surpassed 70 tonnes.

British investors were particularly aggressive. UK-listed gold ETFs pulled in 54 tonnes during the third quarter, far outpacing the 18 tonnes that historical models would have predicted. Fiscal uncertainty appears to be pushing money into hard assets.

Official-Sector Demand Keeps Rolling

Central banks show no sign of stepping back. The People's Bank of China lifted its gold reserves by 740,000 fine ounces in September, bringing total holdings to 77.47 million fine ounces — a 23rd consecutive month of purchases.

Supply flows are shifting elsewhere. Ghana's state gold buyer GoldBod has halted exports since August, with central bank chief Johnson Asiama saying the country intends to rebuild its own reserves rather than ship bullion abroad, given depleted foreign-exchange buffers.

Tuesday's Bounce, Wednesday's Pullback

After a bruising stretch, the metal found its footing on Tuesday, closing 0.6% higher at $4,164.04 per fine ounce. Falling US Treasury yields and a dollar retreating from a one-year high did the heavy lifting, with safe-haven demand — driven by anxiety over the French bond market and US sovereign debt — adding support. Yields on 10- and 30-year Treasuries had touched 24-year peaks earlier in the week before easing.

That relief proved short-lived. By Wednesday, gold was trading 1.5% lower at $4,100.88 per fine ounce, pressured once again by a firmer dollar and elevated US bond yields.

Payrolls Miss Fails to Shift the Narrative

US labour data offered a temporary reprieve. The Labor Department reported just 29,000 nonfarm jobs added in September, well short of the 90,000 economists polled by Reuters had forecast. The miss dampened expectations for further rate hikes and briefly lifted prices, but it could not fully offset the weight of recent bond-market selling.

Traders now turn to the Federal Reserve's September meeting minutes, due at 2:00 p.m. US Eastern time, for clues on the policy path. Gold pays no yield, so rising bond returns erode its relative appeal. The Fed's next scheduled rate decision lands on 28 October.

Additional signals are expected from Friday's CFTC positioning report and US consumer price data slated for 14 October. On a medium-term view, bullion remains 4.1% below its 50-day moving average.