A FRESH surge of investment in exchange traded flows (EFT) is one of the factors behind yet another bout of record-setting gold prices in the last week.
ETF inflows were more than double the previous week with numbers on Friday (September 19) registering the highest daily inflows since January 2022 at 861,000 ounces taking total holdings up to 95.8 million oz.
“After pulling back the day after the Fed’s 25 bps rate cut, potentially on some perceived caution in [Federal Reserve Chair Jerome] Powell’s FOMC comments, new upward momentum has taken root with ETF inflows still the driving force,” said BMO Capital Markets in a note on Monday.
“With a rate-cutting cycle firmly on the table we think risk-reward remains positive for prices into” the fourth quarter, the bank said.
Powell is due to give a highly anticipated speech on the economic outlook later on Tuesday, after the quarterly rate forecasts that accompanied last week’s rate decision, reported Bloomberg News.
Gold is currently trading at $3,753/oz marking a 42.75% year-to-date.
“Over recent years, US real rates have become less influential on gold; however, with the prospects of rate cuts on the horizon, rates seem to have added further fire to the gold price rally over the past few weeks,” said Arnold van Graan, an analyst at Nedbank Securities in Johannesburg.
“The US dollar remains an important factor, though its impact has also lessened, according to our model. Again, developments in the US have weakened the US dollar, which has added further upside to the gold price, in our view,” he said.
Metals Focus, a UK market consultancy, said in the longer term the market remained supportive of gold. “Beyond the short-term, however, the macroeconomic and geopolitical backdrop remains supportive of gold investment and prices,” it said in a weekly note.
“Buying on dips is therefore likely to continue, helping to drive the metal to fresh all-time highs well into 2026. Even with slightly more hawkish guidance for 2026–27, further interest rate cuts are still anticipated,” it said.