September once again saw positive net inflows for the month, pulling in $4.2bn worth of assets across all regions in tandem with the value of gold dipping back below $1,500/oz, according to the World Gold Council’s latest monthly report.
Holdings in gold-backed ETFs reached 2,808 tonnes by month’s end, surpassing 2012’s peak when gold was valued at $1,700/oz. North American and European-domiciled funds account for 52% and 44% of global holdings, respectively.
North America dominated September’s flows, accounting for $3.1bn out of the $4.2bn of global inflows. Europe and Asia’s flows were $586m and $187m, respectively.
Global rates and a strengthening US dollar meant gold’s price rally came to an end. The value fell 3.2% in September, from $1,521/oz to $1,473/oz however, the value and flows are likely to continue growing in October.
Several potential positive catalysts for gold in October, according to the World Gold Council, revolve around continued global uncertainty.
The US is having discussions about proceeding with a formal impeachment investigation of President Donald Trump. This could have a knock-on effect for China to delay trade solutions until the next presidential election in 2020. In Europe, the possibility of a no-deal Brexit or a further extension is still on the table.
Secondly, interest rates are low worldwide with an estimated 80% of sovereign debt is being traded with negative real rates.
Finally, October can see some of the sharpest down-moves in stock performances with 2018 being a prime example of this when the S&P 500 fell 7% for this period.