Gold ETF rush defies 8.5% gold price slide

The divergence appears to have been driven largely by futures selling rather than investors abandoning gold.

Investors poured a record amount of money into gold-backed exchange-traded funds (ETFs) last quarter even as bullion suffered its sharpest monthly drop of the year, underscoring an unusual split between ETF investors and futures traders.

Global gold ETFs attracted $10 billion (C$14.3 billion) in September, lifting third-quarter inflows to a record $31 billion, the World Gold Council said Wednesday.

Holdings increased by 67 tonnes to a record 4,256 tonnes despite the gold price falling 8.5% during the month to finish September at $4,176 per ounce.

“Gold’s six-week decline masks a notable divergence in investor positioning and underlying demand,” BMO Capital Markets analysts Helen Amos and George Heppel wrote in a Tuesday note .

“Unusually, ETFs are still seeing consistent inflows into the price weakness.” The divergence appears to have been driven largely by futures selling rather than investors abandoning gold, according to BMO and the council.

Comex managed-money positions fell by the equivalent of 84 tonnes in September while spread positions dropped by another 156 tonnes.

The futures liquidation more than offset strong ETF demand and helped push bullion lower as U.S.

Treasury yields and the dollar strengthened, the London-based council said in its monthly commentary .

10-year Treasury yield climbed 53 basis points during September to 5.3%, while the U.S.

Gold nevertheless continued to attract ETF money, with $1.4 billion flowing into the funds last week, BMO said.

Investors poured a record amount of money into gold-backed exchange-traded funds (ETFs) last quarter even as bullion suffered its sharpest monthly drop of the year, underscoring an unusual split between ETF investors and futures traders.

Global gold ETFs attracted $10 billion (C$14.3 billion) in September, lifting third-quarter inflows to a record $31 billion, the World Gold Council said Wednesday.

Holdings increased by 67 tonnes to a record 4,256 tonnes despite the gold price falling 8.5% during the month to finish September at $4,176 per ounce.

“Gold’s six-week decline masks a notable divergence in investor positioning and underlying demand,” BMO Capital Markets analysts Helen Amos and George Heppel wrote in a Tuesday note .

“Unusually, ETFs are still seeing consistent inflows into the price weakness.” The divergence appears to have been driven largely by futures selling rather than investors abandoning gold, according to BMO and the council.

Comex managed-money positions fell by the equivalent of 84 tonnes in September while spread positions dropped by another 156 tonnes.

The futures liquidation more than offset strong ETF demand and helped push bullion lower as U.S.

Treasury yields and the dollar strengthened, the London-based council said in its monthly commentary .

10-year Treasury yield climbed 53 basis points during September to 5.3%, while the U.S.

Gold nevertheless continued to attract ETF money, with $1.4 billion flowing into the funds last week, BMO said.

U.S.-listed funds accounted for $689 million of the latest weekly inflows and European funds $452 million, BMO said.

The September decline followed a 13% gold price surge in August to $4,563 per oz., gold’s third-strongest monthly performance in 25 years, according to the council.

The metal ended September down 4.4% for the year.

North American ETFs attracted $4 billion in September, taking third-quarter inflows to $12 billion, the council said.

European funds brought in $3.6 billion during the month and a record $14 billion during the quarter.

U.K.-listed funds attracted $7.5 billion during the quarter, their strongest three months on record, according to the council.

They drew inflows during 12 of the 13 weeks through Sept.