Gold's Split Personality: Record ETF Demand vs. a Dollar at an 18-Month High
Published on 10/13/2026 at 17:10 | Editorial boerse-global.de
Gold is caught in a tug-of-war between two very different sets of buyers, and for now the currency market is winning. A firm US dollar, reported to have touched an 18-month peak, kept bullion on the back foot on Tuesday as traders positioned themselves ahead of a dense run of US economic releases. The metal closed at USD 4,170.33 per troy ounce, pulling back from the previous week's high, according to Reuters.
Jim Wyckoff of American Gold Exchange pinned the retreat squarely on the greenback's strength near that multi-month high. Oil prices also firmed, adding a second headwind, after softer crude had briefly offered relief earlier in the week. A weaker dollar and declining energy costs had given gold a lift in early dealings, though the session's close of USD 4,167.05 per troy ounce made clear that the reprieve never hardened into a genuine upward impulse.
Inflation Anxiety Still Calls the Tune
The short-term narrative continues to run through the inflation channel. Higher crude prices tend to stoke fears of persistent price pressure, which in turn feeds expectations of a more restrictive monetary stance — a negative for a metal that pays no yield. Worries over energy supply linked to the Middle East conflict remain a counterforce, and a single down day for oil does nothing to dispel that uncertainty. For gold, geopolitics and the rate path are now two sides of the same coin.
Attention is fixed on the US consumer price index for September, due tomorrow from the Bureau of Labor Statistics, with producer prices and retail sales following on Thursday. Market participants are combing these reports for signals on the Federal Reserve's next move. A hotter-than-expected inflation reading could cement expectations of further rate hikes and heap additional pressure on bullion. The early bounce, in other words, is no proof that the policy backdrop has turned friendlier.
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Central Banks and Funds Keep Buying
Against that short-term gloom, the demand picture tells a different story. China's central bank raised its gold reserves to 77.47 million fine ounces in September from 76.73 million at the end of August — a 23rd consecutive month of purchases, according to Reuters. The World Gold Council reported USD 10 billion of inflows into physically backed gold ETFs during September, lifting quarterly flows to a record of roughly USD 31 billion.
Those purchases did not stop gold from sliding in September, a decline the World Gold Council attributed in part to rising US yields and a stronger dollar. Global ETF holdings nonetheless climbed by 67 tonnes to a record 4,256 tonnes. The World Gold Council cited concerns over public finances, inflation and the credibility of monetary policy as possible drivers of European ETF demand.
Futures Traders Head for the Exits
The enthusiasm in funds has not been mirrored on the derivatives side. Net long positions on the COMEX fell back, and the positioning of professional money managers shrank as well. That divergence carries a lesson for investors: heavy inflows alone are no guarantee of a rising price, since dollar strength and shifting rate expectations can generate selling pressure at the same time.
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Physical demand offers no clearer verdict. Reuters reported on Friday that buying in India cooled as higher prices deterred purchasers, while trading in China was subdued during a holiday-shortened week. Central bank activity ran the other way — net purchases exceeded sales by 39 tonnes in August, led by China, Uzbekistan and Poland, bringing reported net buying since the start of the year to 170 tonnes.
Institutional accumulation and softer Asian retail demand are thus pulling in opposite directions. Over the longer haul, the primary article's source house pointed to upside potential and possible support from central bank demand. But the immediate focus rests on the dollar, and tomorrow's inflation print will deliver the next hard data point on where rate expectations — and gold's trading environment — are headed.
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