24K99 News Analyst Mike Maharrey stated that the gold ETF has increased its gold net holdings for the fourth consecutive month, with gold net inflows appearing in funds from various regions, led by Western funds. Globally, the gold ETF holdings increased by 28.5 tonnes in August.

Due to the combined effect of rising gold prices and metal fund inflows, the global asset management scale (AUM) supported by gold ETF holdings has grown by 20% so far this year, reaching 275 billion US dollars by the end of August. With inflows of metal funds over the past four months, the decline in gold ETF holdings has narrowed to 44 tonnes year-to-date.

(Source: GoldSeek)

After finally turning positive in July, North American funds led the way in August, adding 17.2 tonnes of gold. In US dollars, gold holdings increased by 1.4 billion US dollars. Declining US Treasury yields and a weak US dollar brought tailwinds to gold last month, propelling gold prices to new highs.

According to the World Gold Council (WGC), the strong performance of gold prices led to the exercising of a large amount of call options in major gold ETFs, resulting in significant capital inflows at maturity.

European funds saw a net inflow of 7.9 tonnes of gold, amounting to 0.362 billion US dollars. Switzerland and the United Kingdom led the way, as the possibility of further interest rate cuts in the eurozone drove safe-haven bidding and lifted gold prices.

The World Gold Council stated, "In the context of local currencies strengthening against the US dollar, the influx of funds related to forex hedging products is particularly significant, especially in Switzerland."

The amount of gold flowing into Asian funds has slowed somewhat, but it has maintained positive growth for 18 consecutive months, reaching 0.3 tonnes. In US dollars, the position increased by 32 million US dollars, representing the smallest increase since May 2023.

India continues to lead the region in gold inflow and reported its strongest month since April 2019. The recent reduction in import tariffs has sparked enthusiasm in the Indian gold market.

Japan also reported significant fund inflows for the sixth consecutive month.

Other regions saw a 3.2 ton increase in fund holdings, and Australia's ETF gold holdings have been increasing for three consecutive months.

Average OTC trading volume increased by 5.9% month-on-month, reaching $158 billion per day. In terms of tonnage, OTC trading volume increased by 2% month-on-month.

Gold inflows into ETFs could push up overall demand and have a significant impact on the global gold market.

ETFs are a convenient way for investors to invest in the gold market, but owning ETF shares does not equate to owning physical gold.

Maharai explains that gold ETFs are backed by a trust company, which holds and stores the metal. In most cases, investing in ETFs does not mean that investors have the right to receive any amount of physical gold. What investors own are shares of the ETF, not the gold itself.

ETFs have relatively strong liquidity, and investors can buy or sell ETFs with just a few clicks of the mouse, without having to worry about transportation or storing the metal. In short, it allows investors to trade in the gold market without having to purchase ounces of metal at spot prices.

Since buying an ETF share is just purchasing a digital asset on a computer, it can be easily converted into another stock or cash at any time, even multiple times in the same day. Many speculative investors take advantage of this liquidity.

But despite the convenience of gold ETFs for manipulating gold prices, they do not actually own any gold. What you own is paper gold. And you cannot be certain if the fund truly holds all the gold, especially when there is an inflow of funds into the fund. In such cases, obtaining physical gold can be difficult or delayed," Mahary further said.