Gold: Lukewarm inflows even after geopolitical turmoil – TD Securities

Gold Demand Weakens Amid Global Uncertainty

Daniel Ghali, Senior Commodity Strategist at TD Securities, observes that demand for gold has been unexpectedly subdued since the conflict began. Over-the-counter activity diminished quickly after the initial trading session, and recent trading volumes have been reminiscent of the quiet summer period. Participation from leveraged investors, exchange-traded funds, SHFE traders, and retail buyers has all decreased, signaling worries about currency devaluation, fewer purchases from the Middle East, and gold’s widespread adoption among institutional investors.

Factors Limiting Gold Inflows

• OTC gold activity has shown little momentum beyond the first day of trading following the outbreak of war.
• Trading volumes have dropped to levels typically seen during summer, with leveraged investors pulling back, possibly due to recent quant fund deleveraging.
• ETF gold holdings have declined, and major SHFE traders have reduced their positions. Retail interest has waned since the surge in January.
• Three main reasons are behind the lack of new investment: skepticism about the debasement trade as expectations for Fed rate cuts fade, decreased gold buying from Middle Eastern countries, and the fact that gold is now a mainstream asset among institutional investors, as shown by 13F filings.

This article was produced with assistance from an AI tool and subsequently reviewed by an editor.