Gold Back Over $2,500 As ETF Inflows Pick Up Again

We've written recently about how this year's gold rally has mostly been driven by the eastern market, while western data has shown consistent outflows and retail selling. Yet with the Fed on the verge of beginning to cut interest rates, how we could see the dynamics in the western market change.

Sure enough, the latest data is out, and the World Gold Council reports that "global gold ETFs experienced their strongest month since April 2022, attracting $3.7bn in July, with Western funds leading the way."

In fact, the central banks just set a new first-half gold purchasing record of 483 tons. Which breaks the record set in 2023 of 460 tons, with Turkey, China, India, and Poland leading the way.

Now, in some years it might be reasonable to think that after the significant rally we've already had this year that the buying might slow down in the second half. 

But with the Fed still being a lot closer to cutting than hiking, and with the US Treasury recently ordering banks to disclose any Russian assets for eventual forfeiture, the conditions that have driven the rally, and that would facilitate further upward pressure on the gold price, are both firmly in place.

The ETFs have now added inflows for three consecutive months after a series of outflows, while the banks have continued to increase their gold and silver price targets in the research they're sending out to their institutional clients. 

And if the Fed does cut rates by 25, or even 50 basis points by its September meeting, we'll likely see a continuation of this trend. 

Arcadia EconomicsSilver Research, Trading, and Financial Show Host

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