Despite gold prices facing near-term headwinds since August, gold-themed exchange-traded funds have continued to attract steady capital inflows. Wind data shows that as of September 16, 14 gold-related ETFs recorded combined net inflows exceeding 8.2 billion yuan over the past month, with their latest combined total assets under management approaching 280 billion yuan. Several institutions believe that gold prices are under short-term pressure due to factors such as rising expectations of a Federal Reserve rate hike, a stronger US dollar and real yields, elevated oil prices, and cautious sentiment ahead of the Federal Open Market Committee meeting. However, central bank gold purchases, reserve diversification, and safe-haven demand continue to provide solid support for gold prices, potentially signaling an opportune moment for gold ETFs to enter a favorable allocation window.

Gold ETFs See Inflows Exceeding 8 Billion Yuan in One Month

Gold ETF capital flows have fluctuated alongside gold price movements this year. Between May and June, international gold prices swung wildly, with spot gold in London briefly falling below $3,950 per ounce, prompting over 23.1 billion yuan of capital to exit gold ETFs during that period. From July to August, gold prices rebounded with fluctuations, with spot gold breaking above $4,650 per ounce at one point, before entering a correction phase. Entering September, gold prices have been oscillating within a range of $4,300 to $4,480 per ounce. "Recently, escalating risk from the Middle East conflict has pushed international oil prices higher, and combined with rising market expectations of a Fed rate hike in September, gold prices have weakened consecutively," said Qu Rui, an analyst at the research and development department of Golden Credit Rating. On September 16 local time, the Fed officially announced a 25-basis-point increase in the target range for the federal funds rate, marking its first rate increase in over three years since July 2023. In this context, gold prices have shown a consolidation trend since September, yet market gold ETFs have maintained continuous net inflows. Wind data reveals that as of September 16, gold ETFs tracking the SGE Gold 9999 Index recorded combined net inflows of 5.968 billion yuan over the past month, with the seven linked ETFs reaching a total scale of 247.683 billion yuan. The seven ETFs tracking Shanghai Gold saw inflows of 2.259 billion yuan over the past month, bringing their combined scale to 31.484 billion yuan. Based on these figures, the 14 gold ETFs have seen combined net inflows exceeding 8.2 billion yuan over the past month, with total scale nearing 280 billion yuan. "Overall, gold prices have shown a muted reaction recently to higher oil prices and rising rate hike expectations, mainly because gold's high tolerance for multiple macro paths, depending on how Middle East issues evolve and the different options the US government faces in resolving its debt problems, may attract funds for hedging allocations. The recent inflows into futures markets and ETFs both domestically and internationally serve as strong evidence of this scenario," noted Wang Xiang, fund manager at Bosera Asset Management.

Looking at individual products, leading gold ETFs remain the primary magnets for inflows. Wind data shows that as of September 16, the Huaxia Gold ETF recorded net inflows of 2.925 billion yuan over the past month, while the Guotai Gold ETF saw net inflows of 2.407 billion yuan. In terms of total scale, the Huaxia Gold ETF has surpassed 100 billion yuan, becoming the first commodity ETF in China to reach the hundred-billion-yuan level. Gold ETFs under Bosera, E Fund, and Guotai Fund Management also each hold scales exceeding 30 billion yuan.

Global Gold Investment Enthusiasm Remains Strong

Despite near-term pressure on gold prices, enthusiasm for gold investment worldwide continues to heat up. Data from the World Gold Council shows that global gold ETFs recorded net inflows of $18 billion in August, marking the second-largest monthly inflow on record. By region, European gold ETFs saw inflows of $7.9 billion, setting a new local record high, while North American gold ETFs recorded net inflows of $7.7 billion, and Asian gold ETFs saw inflows of $2 billion, the highest since February this year. Year-to-date, global gold ETFs have accumulated inflows of $29 billion, equivalent to a net addition of 160 tonnes of gold, with Asia leading the charge, followed by Europe. The World Gold Council cited several drivers behind August's accelerated gold ETF inflows, including yen intervention and foreign exchange policy concerns, heightened fiscal and US Treasury market worries, and momentum-driven demand for gold ETFs. Liu Shiyao, an analyst at Zitong Tianfeng Futures, believes that the shift of gold ETF capital from net outflows to strong inflows in 2026 is the result of multiple factors working together, including peak Fed rate hike expectations, a weakening US dollar, rigid central bank gold purchases, and the rise of Chinese investment demand. Central bank gold purchase data also indicates that medium-to-long-term support for gold demand remains solid. The People's Bank of China's latest data shows that as of the end of August 2026, China's gold reserves stood at 76.73 million ounces, marking the 22nd consecutive month of gold increases, with August's increase setting a monthly record for the current accumulation cycle. China's sustained gold purchases are not an isolated case. Recently, the Bank of Korea announced plans to increase its official gold reserves, marking the first time the central bank has purchased physical gold since 2013. The head of the Bank of Korea's reserve management group, Jung Hee-soo, stated that the Bank of Korea began purchasing gold ETFs in the second quarter. In addition to buying ETFs, the Bank of Korea has also established a framework to purchase domestically produced physical gold in the near future. A World Gold Council survey of central banks released in June, titled the "2026 Central Bank Gold Reserve Survey," showed that nearly 90% of respondent central banks expect global central bank gold reserves to continue increasing over the next 12 months, with 45% indicating plans to add to their gold holdings within the next year, a proportion reaching an all-time high in the survey's history. China Asset Management stated that central bank gold purchases provide structural demand for gold, while US fiscal pressures and the repricing of US dollar asset credit increase the need for diversified asset allocation. Gold, lacking sovereign credit risk, serves as a critical tool for diversification. Furthermore, geopolitical conflicts and shipping risks have reinforced gold's safe-haven appeal.

Institutions Affirm Gold's Solid Allocation Value

Looking ahead, industry analysts point out that in the short term, with rate hike expectations fully priced in, the downside for gold prices is limited. From a medium-to-long-term perspective, amid persistent global geopolitical uncertainty and the ongoing restructuring of the US dollar credit system, the combined effect of sustained central bank gold purchases and investors' diversified allocation needs is expected to provide solid medium-to-long-term support for gold prices. "Currently, the rate hike itself has largely been digested by the market, and its marginal impact on gold prices is weakening," said Qu Rui. Following the September FOMC meeting, market focus will shift from "whether to hike" to "whether to continue hiking consecutively" - given the high US fiscal deficit, the snowballing effect of debt interest payments, and the fact that this round of inflation is primarily driven by supply-side shocks from Middle East-induced oil price increases rather than demand-side overheating, the Fed will likely avoid consecutive rate hikes. With rate hike expectations fully priced in, the downside for gold prices is limited, and prices are likely to exhibit a relatively firm oscillating trend. Liu Tingyu, fund manager of the Gold Stock ETF at Yongying Fund Management, noted that rate hikes can suppress demand but struggle to alleviate supply-side pressures. Constrained by long-term Treasury credit shocks and fiscal deficit limits, the Fed lacks the conditions for sustained rate hikes. If Fed rate hikes trigger stagflation, it could also be favorable for gold, and the long-term allocation logic for gold remains intact. A research report from Soochow Securities suggests that central bank gold purchases and global allocation demand have not reversed, and the current gold price decline is more akin to a deep market correction, with the long-term upward structure still intact. It recommends gradually building positions during price pullbacks driven by temporary real rate or US dollar strength. However, regarding the near-term price volatility and consolidation, Bosera Fund also cautioned that gold has experienced significant fluctuations recently, and investors in gold funds should fully recognize the risks and make prudent decisions based on their own risk tolerance. Additionally, it is advisable to continuously monitor global macroeconomic trends, central bank gold purchase activities, and relevant policy developments.

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