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After charting the highest level of gold inflows on record in September, the flow of gold into ETFs slowed modestly in October but remained comfortably above the year-to-date average.

It was the fifth straight month of net gold inflows into ETFs globally.

In total, 54.9 tonnes of gold flowed into gold-backed funds last month. As of the end of October, gold ETFs held 3,893 tonnes of metal, about 1 percent below the all-time high reached during the pandemic.

Assets under management (AUM) by gold ETFs rose 6 percent to a record $503 billion.  

North American funds led the way, adding another 47.2 tonnes of gold to their holdings, busting AUM by $6.5 billion. This occurred despite some profit-taking at the end of the month that drove $1 billion in outflows. Before the gold selloff, North American funds were on track for another record month.

According to the World Gold Council, “Geopolitical risk, lower yields, and equity market frothiness may have been key drivers of gold demand as investors seek portfolio diversification.”

Asian funds also reported significant inflows of 44.8 tonnes of gold. Chinese ETFs dominated in the East, adding $4.5 billion to their holdings. According to the World Gold Council, “The US-China tension flare-up in early October, alongside the gold price strength, sparked renewed gold interest among local investors. And slowing growth in Q3 also boosted local investor safe-haven demand.”

Meanwhile, Japanese ETFs have reported inflows of metal for 13 straight months, while Indian funds charted their fifth month of positive flows.

On the flip side of the coin, European funds reported significant outflows of -37.4 tonnes totaling $4.5 billion. It was the region's second-largest outflow on record.

Switzerland was the bright spot, reporting gold inflows, but it wasn’t enough to offset a record decrease in UK-based fund gold holdings. German ETFs also reported significant outflows.

According to World Gold Council analysts, the outflows in Europe were driven by a combination of profit-taking and portfolio rebalancing.

Funds in other regions, including Australia and Africa, reported modest gold inflows of 0.3 tonnes.

ETFs are a convenient way for investors to play the gold market, but owning ETF shares is not the same as holding physical gold.

ETFs are relatively liquid. You can buy or sell an ETF with a couple of mouse clicks. You don’t have to worry about transporting or storing metal. In a nutshell, it allows investors to play the gold market without buying full ounces of metal at the spot price. 

Since you are just buying a number in a computer, you can easily trade your ETF shares for another stock or cash whenever you want, even multiple times on the same day. Many speculative investors take advantage of this liquidity.

But while a gold ETF is a convenient way to play the price of gold on the market, you don’t actually possess any gold. You have paper. And you don’t know for sure that the fund has all the gold either, especially when the fund sees inflows. In such a scenario, there have been difficulties or delays in obtaining physical metal.

Gold Trading Volumes

Gold trading volumes surged in October, hitting a record high of $561 billion per day. That was a 45 percent month-on-month increase.

Trading volume in tonnage terms rose 31 percent month-on-month to 4,287 tonnes per day. That was just 1 percent below the record set in April at the height of tariff tensions.

Exchange-traded volume rose 59 percent month-on-month, averaging $300 billion per day. There was strong activity on both the COMEX and the Shanghai Futures Exchange.

Over-the-counter trading was up 28 percent on the month to $245 billion per day. That was 92 percent higher than the 2024 average.

The government shutdown prevented updates to net long positioning. However, futures open interest fell 4 percent month-on-month to $235 billion by month-end. This signals a decline in long positions.

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