Source: Jin10 Data

Analysts believe that in the coming months, the inflow of funds into gold exchange-traded funds (ETFs), especially from Western investors, will increase, providing more positive stimulus for the already historically high gold prices.

This week, gold has hit a new historical high for 3 consecutive days. So far this year, the price of gold has risen by nearly 30%, reaching as high as $2670, directly benefiting from loose monetary policies of central banks and geopolitical tensions. Interest rate cuts in the USA, Europe, and more recently in China have fueled bullish sentiment, with investors focusing on whether gold can further rise, including breaking the new record of $3000.

Exchange-traded products (ETPs) or exchange-traded funds (ETFs) allow investors to gain exposure to assets such as gold without physical delivery. Any increase in positions is significant for prices since ETPs are based on physical commodities.

Increased fund inflows will reduce the available supply of precious metals for trading in the market, further driving up gold prices.

Standard Chartered Bank analyst Suki Cooper stated: "Now that the interest rate cutting cycle has begun, we believe ETP inflows may accelerate, supporting the next round of gold price increases. ETP flows typically have a stronger correlation with actual yields and the US dollar, which have now turned positive. Most of the inflows are coming from Europe, but North America has led new interest over the past two months."

World Gold Council (WGC) data shows that global gold ETF inflows reached $2.1 billion in August, equivalent to 28.5 tons. All regions reported inflows, with the largest inflows from the West.

North American gold ETF saw an additional $1.4 billion inflow last month, equivalent to a shareholding increase of 17.2 tons of gold. WGC added that soft US economic data, dovish Fed comments, declining dollar and yields, and opportunity costThe decrease has led to fund inflows.

Previously, with global interest rates high, gold ETF has seen consecutive outflows for three years. The recent four months have only reduced the net outflow so far this year by 44 tons.

Last week, the Federal Reserve initiated an expected rate cut cycle by 50 basis points, and the European Central Bank also cut rates in June and earlier this month.

JPMorgan, Goldman Sachs, Citi, and UBS Group and other major banks reaffirmed their bullish stance on gold, predicting price increases and an increase in gold ETF holdings.

In a report, Goldman Sachs stated: "The Fed rate cut will prompt Western capital to flow back into gold ETFs, a part of the gold market that has largely been absent amid the significant gains over the past two years."

JPMorgan pointed out this week that fund inflows into gold ETFs, primarily from retail investors, will be crucial for gold to continue its upward trajectory, with a peak target of $2,850 in 2025.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated: "The current basis for new demand in gold ETFs is declining interest rates, but this raises a question of whether investors are prepared to buy at such high prices."

Editor / jayden