In September investors purchased billions of dollars’ worth of gold, but the decline in prices counteracted that demand, revealing an unexpected difference between those who bought physical gold and the financial markets.
In September 2026, investors in gold poured in about $10 billion into exchange-traded funds that were backed by physical gold all over the world, but by the end of the month the value of those funds had dropped by around $41 billion. As stated in the World Gold Council’s October 7 report, global assets under management of gold ETFs fell from $615 billion in August to $574 billion in September, even though physical gold holdings rose by 67 metric tonnes to reach a record high of 4,256 tonnes. Although investors were buying more gold, the value of their total holdings was decreasing. This situation raises a basic question concerning an asset which has long been seen as a safe haven: how can demand be going up while the investment itself is losing value?
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The point lies in the way investment funds are valued. With physically backed gold ETFs, investors are able to obtain exposure to gold prices without having to store the bullion themselves. When investors put in more money, the funds can increase their amount of gold, but the gold that they already own is still worth the current market price. If the market prices drop by a large enough amount, the decrease in the existing holdings can outweigh the value of the new investments. This is exactly what the September figures show. The $41 billion drop indicates a reduction in the total asset value of the funds, not $41 billion that was withdrawn by investors or a loss that has been confirmed for individual shareholders.
The fact that this distinction is important is that the amount of money going into an investment is often seen as a sign of market confidence. However, demand by itself does not decide whether an asset will increase in value. The World Gold Council’s August report shows that global ETF assets had got to $615 billion after gold prices and investment demand had had an exceptionally strong month. Yet in September much of the value gained earlier was reversed even though there had been continued buying.
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The reasons go beyond the gold funds themselves. At the end of September gold was at about $4,176 per ounce, representing a monthly drop of 8.5%, since American Treasury yields rose and the dollar became stronger. Johan Palmberg, who is the senior quantitative analyst at the World Gold Council, pointed out “a rise in yields and a stronger US dollar” as major factors in his October 7 market commentary. In September the 10-year Treasury yield went up by 0.53 percentage points to 5.3%, and the US dollar index rose by about 2%. Unlike government bonds, gold does not pay any interest, which makes it less appealing to some investors when yields increase.
A significant development took place in the futures market. The net positions of managed-money funds in COMEX gold futures decreased by about $12 billion, and those involving spreading positions based on offsetting futures contracts fell by around $22 billion. These were changes in derivatives exposure and not withdrawals from gold ETFs, but the decline in positioning probably exerted downward pressure on prices. Meanwhile, North American gold ETFs attracted approximately $4 billion, European funds received $3.6 billion, and Asian funds took in $2.3 billion. Investors who were buying physical gold exposure were acting in one direction while major parts of the futures market were moving in a different one.
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There is still a valid point to be made against seeing the decline in September as proof that investors have lost confidence in gold. The World Gold Council stated that there were record-level inflows into global ETFs amounting to $31 billion in the third quarter, physical holdings rose by 211 tonnes and total fund assets increased by 9% over the entire quarter. It is possible that some investors saw the fall in September’s prices as an opportunity to boost their exposure to gold rather than give it up. Furthermore, ongoing inflation, fiscal uncertainty and volatility in government bond markets could all contribute to demand for gold as a longer-term portfolio diversifier.
The more important point is whether that demand is able to keep overcoming the financial pressures that are acting against gold prices. Investors ought to keep an eye on Treasury yields, the dollar, and futures positioning as well as the inflows into physical ETFs, rather than placing their trust in any one indicator of demand. The fact that in September even historically strong buying did not ensure an increase in asset values shows this. The true warning is not that investors have given up on gold, but that it is possible for investors to keep buying billions of dollars’ worth of it while the market at the same time assigns a much lower value to what they already own.
Gold investors poured in $10 billion, yet ETF assets fell $41 billion
In September investors purchased billions of dollars’ worth of gold, but the decline in prices counteracted that demand, revealing an unexpected difference between those who bought physical gold and the financial markets.
In September 2026, investors in gold poured in about $10 billion into exchange-traded funds that were backed by physical gold all over the world, but by the end of the month the value of those funds had dropped by around $41 billion. As stated in the World Gold Council’s October 7 report, global assets under management of gold ETFs fell from $615 billion in August to $574 billion in September, even though physical gold holdings rose by 67 metric tonnes to reach a record high of 4,256 tonnes. Although investors were buying more gold, the value of their total holdings was decreasing. This situation raises a basic question concerning an asset which has long been seen as a safe haven: how can demand be going up while the investment itself is losing value?
Mutual Funds Up in 2026: Top Performing Funds Investors Are Watching →
The point lies in the way investment funds are valued. With physically backed gold ETFs, investors are able to obtain exposure to gold prices without having to store the bullion themselves. When investors put in more money, the funds can increase their amount of gold, but the gold that they already own is still worth the current market price. If the market prices drop by a large enough amount, the decrease in the existing holdings can outweigh the value of the new investments. This is exactly what the September figures show. The $41 billion drop indicates a reduction in the total asset value of the funds, not $41 billion that was withdrawn by investors or a loss that has been confirmed for individual shareholders.
The fact that this distinction is important is that the amount of money going into an investment is often seen as a sign of market confidence. However, demand by itself does not decide whether an asset will increase in value. The World Gold Council’s August report shows that global ETF assets had got to $615 billion after gold prices and investment demand had had an exceptionally strong month. Yet in September much of the value gained earlier was reversed even though there had been continued buying.
America’s 5% Treasury Yield Is Repricing the World →
The reasons go beyond the gold funds themselves. At the end of September gold was at about $4,176 per ounce, representing a monthly drop of 8.5%, since American Treasury yields rose and the dollar became stronger. Johan Palmberg, who is the senior quantitative analyst at the World Gold Council, pointed out “a rise in yields and a stronger US dollar” as major factors in his October 7 market commentary. In September the 10-year Treasury yield went up by 0.53 percentage points to 5.3%, and the US dollar index rose by about 2%. Unlike government bonds, gold does not pay any interest, which makes it less appealing to some investors when yields increase.
A significant development took place in the futures market. The net positions of managed-money funds in COMEX gold futures decreased by about $12 billion, and those involving spreading positions based on offsetting futures contracts fell by around $22 billion. These were changes in derivatives exposure and not withdrawals from gold ETFs, but the decline in positioning probably exerted downward pressure on prices. Meanwhile, North American gold ETFs attracted approximately $4 billion, European funds received $3.6 billion, and Asian funds took in $2.3 billion. Investors who were buying physical gold exposure were acting in one direction while major parts of the futures market were moving in a different one.
Why the Global Stock Market Outlook Has Investors on Edge →
There is still a valid point to be made against seeing the decline in September as proof that investors have lost confidence in gold. The World Gold Council stated that there were record-level inflows into global ETFs amounting to $31 billion in the third quarter, physical holdings rose by 211 tonnes and total fund assets increased by 9% over the entire quarter. It is possible that some investors saw the fall in September’s prices as an opportunity to boost their exposure to gold rather than give it up. Furthermore, ongoing inflation, fiscal uncertainty and volatility in government bond markets could all contribute to demand for gold as a longer-term portfolio diversifier.
The more important point is whether that demand is able to keep overcoming the financial pressures that are acting against gold prices. Investors ought to keep an eye on Treasury yields, the dollar, and futures positioning as well as the inflows into physical ETFs, rather than placing their trust in any one indicator of demand. The fact that in September even historically strong buying did not ensure an increase in asset values shows this. The true warning is not that investors have given up on gold, but that it is possible for investors to keep buying billions of dollars’ worth of it while the market at the same time assigns a much lower value to what they already own.