Gold Pares Losses as Record ETF Inflows Offset Fed-Fueled Selloff
Published on 10/08/2026 at 05:30 | Editorial boerse-global.de
Gold prices regained some ground in Asian trading on Thursday, clawing back a portion of the previous session's losses after the U.S. dollar retreated from its recent peak. The recovery follows a sharp bout of selling pressure that had pushed the metal to its weakest level in weeks, driven by climbing Treasury yields and the release of the Federal Reserve's latest meeting minutes.
Spot gold settled at $4,109.93 an ounce on Wednesday, a daily decline of 1.3%. At one point during the session, prices slid as low as $4,066.30. That pullback has widened the gap between current levels and the 52-week high of $5,598.58 reached at the end of January to 27%.
Rate Expectations Weigh on Bullion
The midweek slump stemmed largely from the U.S. interest-rate outlook. Minutes from the Fed's September 15-16 meeting, published Wednesday, showed that a majority of policymakers consider another rate hike before year-end likely appropriate.
The prospect of prolonged restrictive policy drove 10-year Treasury yields above 5.3%, their highest since 2002. Meanwhile, the 30-year yield briefly touched a 24-year peak of 5.7%. That dynamic creates headwinds for gold, since the non-yielding metal loses appeal relative to fixed-income assets.
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Fears of further tightening are compounded by concerns over renewed inflation risks tied to geopolitical tensions in the Middle East and elevated energy costs. Brent crude briefly traded back above $100 a barrel, complicating central banks' battle against price pressures and tempering hopes for an early easing cycle.
Technical Barriers and Physical Support
Despite Thursday morning's rebound, the technical picture remains challenging. According to research house Pepperstone, the short-term outlook for the metal won't brighten until a sustained break above the $4,275 mark. Zaner Metals strategist Peter Grant sees a possible test of the round $4,000 level before any lasting reversal takes hold.
Support is nonetheless coming from the physical side. Analysts at TD Securities point to institutional ETF inflows and persistent central-bank demand as providing a stable foundation. Buying from Asia in particular is helping to counteract extreme downside moves.
Record ETF Inflows Signal Deepening Haven Demand
Those observations are backed by hard numbers. The World Gold Council reported that global inflows into gold-backed ETFs hit a record $31 billion in the third quarter, reflecting a sustained hedging impulse among market participants. September alone accounted for $10 billion, or 67 tonnes, pushing worldwide holdings to an all-time high of 4,256 tonnes. Physical backing through the funds has thus reached a historic level.
Central banks have been expanding their reserves in parallel. The People's Bank of China raised its gold holdings by 740,000 ounces in September to 77.47 million ounces — a 23rd consecutive month of net purchases and its largest monthly increase in three years. The broader central-bank community also remains on the buy side: according to the World Gold Council, institutions were net buyers of 39 tonnes in August, bringing reported net purchases since the start of the year to 170 tonnes. Bundesbank President Joachim Nagel used the LBMA Global Precious Metals Conference in Sorrento to advocate further diversification of currency reserves in favor of the metal.
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Currency and Bond Markets Set the Near-Term Tone
Headwinds have lately come chiefly from foreign exchange and bond markets. A firmer dollar and rising Treasury yields have weighed on the non-yielding metal, though a weaker-than-expected U.S. inflation report had previously dampened expectations for further rate increases and offered prices brief respite.
Traders are now focused squarely on the path of U.S. monetary policy. The Fed's next rate decision is scheduled for October 28.
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