September review
A surge in US Treasury yields and the US dollar alongside a drop in futures positions helped drive prices lower in September, despite impressive gold ETF inflows.
Looking forward
UK gold ETFs delivered a stellar Q3. Fiscal concerns may be helping, but this looks less like the short-lived 2022 surge and more like a sustained shift in demand.
Gold finished September at US$4,176/oz, 8.5% lower m/m, with similar declines across all the major currencies we track (Table 1).
Our Gold Return Attribution Model (GRAM) suggests that a rise in yields and a stronger US dollar were major contributors to September’s drop in prices as the US 10-year Treasury yield climbed 53bps to 5.3% and the DXY index rose 2% (Chart 1).
Yet September was unusual: despite the price decline, global gold ETFs recorded US$10bn (67t) of inflows across regions. North America led the charge, followed by Europe and Asia.
In contrast to strong ETF demand, COMEX positioning contracted sharply. Net managed money positions fell by US$12bn (84t), while total spreading positions (reflecting investors with offsetting long and short positions, typically in different calendar months) declined by US$22bn (156t). This futures liquidation likely contributed to September’s price decline, highlighting the divergence between ETF and derivatives market flows.
| USD (oz) | EUR (oz) | JPY (g) | GBP (oz) | CAD (oz) | CHF (oz) | INR (10g) | RMB (g) | TRY (oz) | AUD (oz) | |
|---|---|---|---|---|---|---|---|---|---|---|
| September price* | 4,176 | 3,683 | 21,117 | 3,149 | 5,937 | 3,488 | 147,613 | 908 | 204,707 | 6,008 |
| September return* | -8.5% | -6.5% | -10.1% | -6.6% | -6.4% | -5.6% | -4.8% | -5.5% | -7.0% | -5.7% |
| Y-t-d return* | -4.4% | -0.9% | -3.8% | -2.9% | -0.7% | 0.9% | 11.3% | -6.8% | 9.2% | -7.8% |
| Record high price* | 5,405 | 4,539 | 26,884 | 3,961 | 7,305 | 4,143 | 175,231 | 1,248 | 234,639 | 7,701 |
| Record high date* |
29-Jan- 2026 |
02-Mar- 2026 |
02-Mar- 2026 |
02-Mar- 2026 |
29-Jan- 2026 |
29-Jan- 2026 |
29-Jan- 2026 |
29-Jan- 2026 |
29-Jan- 2026 |
29-Jan- 2026 |
*Data as of 30 September 2026.
Source: Bloomberg, World Gold Council
Rising government bond yields have generated intense debate this year. Explanations range from stronger growth and a return to historical norms, to fiscal risk and a weakening safe-haven premium. Europe’s surge in gold ETF inflows, led by the UK and exceeding US inflows over the past three months, suggests some investors may see the rise in yields as a warning rather than a healthy normalisation (Chart 2).
UK gold ETFs recorded exceptionally strong inflows in Q3. Alongside solid demand in France and Germany, this lifted European inflows above North American inflows and resulted in the first positive-flow quarter since 2021.
UK-listed gold ETFs attracted 54t in Q3 with inflows in 12 of the 13 weeks to 25 September. Their persistence points to a sustained shift in demand rather than a response to a single event.
A simple model based on the past five-year relationship between UK and Western (US and Europe ex UK) ETF flows would have predicted Q3 inflows of around 18t, compared with the 54t recorded. The resulting 36t excess is particularly striking given that UK-listed funds represent only around one-third of Western gold ETF assets (Chart 3).
Could local economic stress explain the divergence? Adding measures of UK policy uncertainty, relative equity market performance, currency moves, credit risk, government bond yields and term premium to the five-year model does little to close the gap; historically, their relationships with excess UK ETF flows have been weak and inconsistent.
But one relationship stands out over the period since July: excess UK gold ETF flows have moved alongside the UK term premium (Chart 4). The relationship was weak before July but has strengthened markedly since, suggesting that rising term premia, and the inflation or fiscal risks they reflect, may now be influencing UK gold ETF demand.
The sample is short, but the relationship is consistent with investor response to inflation uncertainty, fiscal concerns or the risk that the Bank of England is behind the curve.
The July report from the Office for Budget Responsibility provides context for those concerns, warning that the UK’s fiscal path is unsustainable without significant policy tightening.1 The persistence of the term-premium rise, unlike the brief spike in 2022 during the gilt crisis, may help explain why ETF demand has also endured.
A similar development is apparent in France and Germany, where yields and term premia are also rising. ETF inflows have so far been less pronounced, although investors may express gold exposure through funds or instruments listed elsewhere, particularly given the smaller size of these domestic markets.
Unlike the sharp but short-lived UK dislocation of 2022, the latest European gold ETF inflows appear broader and more persistent. UK demand is exceptional, but rising term premia and inflows elsewhere in Europe suggest a shared concern about the interaction between fiscal strains, inflation uncertainty and monetary policy credibility.
October may test this interpretation.
At the centre is the upcoming Fed meeting: recent US data no longer support the case for an imminent hike, and markets have lowered tightening expectations not only for the Fed, but also for the Bank of England and the ECB. If bond yields remain elevated despite this mildly dovish repricing, it would suggest that investors are focused less on near-term policy rates and more on deeper fiscal and term-premium risks, potentially continuing to support gold demand.
