ETF Holdings Show a Slight Decline
Gold ETF holdings data on August 26 shows that holdings of the world's largest gold ETF decreased by 1.141 metric tons compared to the previous trading day. ETF holdings are a key indicator for gauging the sentiment of medium- to long-term capital. The outflow suggests that some institutions began locking in profits following the rapid price increase.
However, a single day of minor outflow is not yet sufficient to confirm a trend reversal. Gold was previously driven by a combination of safe-haven buying, a weaker US dollar, and a decline in long-term US Treasury yields. The price touched near $4696 during the session, indicating that spot demand remains robust.
Three Main Drivers for Gold's Rise
First, geopolitical uncertainty continues to boost demand for safe-haven assets. Second, US Treasury interventions in the bond market have pushed long-term yields lower, reducing the opportunity cost of holding non-interest-bearing gold. Third, the market is awaiting PCE inflation data and reassessing the Federal Reserve's subsequent policy path.
Central bank gold buying remains a medium-to-long-term support. Official reserve funds typically do not retreat immediately due to short-term price increases. Therefore, even if ETFs see tactical outflows, structural demand may still limit the extent of any gold price pullback.
Divergence is Widening at High Levels
Gold has seen significant short-term gains, and profit-taking is likely to occur around $4690-$4700. The ETF outflow is precisely a signal of this high-level divergence. If the US dollar and yields rebound, the gold price may test support at $4650 or even lower.
If PCE data comes in below expectations and yields continue to decline, gold may challenge the $4700 level again and push market targets towards higher zones. Investors should also monitor whether ETF holdings decline consecutively; a single day's outflow has limited impact, but multiple consecutive days of outflows would significantly weaken the bullish structure.
