Over the last two months, gold has completed a round trip. Spot bullion prices rose to nearly $4,700 before erasing the entire move. Yet despite the volatility, interest in physically backed gold ETFs, like the SPDR Gold Shares ETF (GLD), remains healthy.
Commodity specialist Vincent Lanci noted this apparent strength, particularly in several consecutive trading sessions at the end of the third quarter. According to Bloomberg data, total known holdings rose to 100.9 million ounces, up 2% this year. That is the highest since Aug. 5, 2022, and close to 101 million ounces.
Competing With Yield
Spot gold, meanwhile, is down 3.2% for the year at about $4,182. It has fallen from a record $5,595 in January, pressured by the Federal Reserve's Sept. 16 rate hike, its first since 2023. The 10-year Treasury, meanwhile, has reached as high as 5.35%.
"For a non-yielding asset, all else equal, that is going to be challenging because gold has to compete against that yield level in people's portfolios," Amy Gower, commodities strategist at Morgan Stanley, said, according to Reuters. Still, she noted, gold holding above $4,000 "signals that there is still demand that goes outside of what is happening with yields."
Nicky Shiels, metals strategist at MKS PAMP, attributes the resilience to a structural premium. "Since 2022, a persistent, structurally higher premium driven by reserve diversification and geopolitical hedging has become the dominant driver that macro factors no longer capture, and it is not fading," she said. She estimates the premium at roughly $840 an ounce, up from about $120 before 2022.
Official buying supports that view. China imported 1,077 metric tons in the first eight months of the year, which puts 2026 on track for its highest annual imports in 11 years. Poland's central bank is also buying ahead of last year's pace.
Fiscal Year-End Window Extends the "Sell Season"
Seasonal patterns suggest the metal could stay under pressure until Nov. 1. Lanci notes that institutional managers and hedge funds typically rebalance their books and trim risk ahead of fiscal year-end.
Rising yields are adding to the pressure. Heavy bond issuance to fund artificial intelligence investment and large sovereign deficits is pushing yields higher and prompting tactical de-risking.
Even so, structural buyers have kept a floor near $4,000.
"The temporary headwinds for gold are enormous and, in almost any other environment, would probably have pushed prices significantly lower," said Jay Tatum, portfolio manager at Valent Asset Management. "Prices are not lower because underlying factors are so strong. I think of gold right now as somebody compressing a spring."
The seasonal pattern turns after Nov. 1. The "buy season" runs through Feb. 1 and has historically reversed autumn weakness, as banks publish updated annual outlooks and multi-asset funds deploy fresh fiscal-year capital.
An end to the Fed's tightening cycle could also help. It would ease the opportunity-cost drag on gold and open the way for more Western investment. HSBC said "heavy liquidation, notably in ETFs, is reversing as structural factors that aided gold pre-Iran conflict resume," adding that institutional demand for large bars is robust.
A slow supply response provides further price support. According to the World Gold Council, second-quarter mine output was 966 metric tons, up just 2%, while recycling fell 6% to 326 tons. Expansion in the through drilling and construction takes time, so new ETF and institutional buying must draw on existing physical inventory.
