Record inflows into gold ETFs like GLDM and GLD face a critical test as rising real yields and 5% Treasury rates pressure the metal's recent price gains.
Spot gold slid 1.2% after the Fed's rate hike and faces rising real yields, but record global ETF holdings suggest underlying structural demand may limit downside.
GLDM is down 3% with rising real yields acting as a headwind, but record North American gold ETF inflows suggest structural demand rather than pure momentum.
GLD shares in the same North American physically backed gold ETF inflow pool and faces similar real-yield sensitivity as GLDM.
IAU is part of the record North American gold ETF buying, but its trend depends on whether real yields roll over or keep climbing.
IAUM, as a low-cost gold ETF, is included in the August surge but faces the same opportunity-cost headwind from 5% Treasury yields.
SGOL is mentioned among physically backed gold ETFs that captured the 108-fold jump in net buying, though real yields now challenge durability.
North American gold ETFs experienced a massive 108-fold surge in net buying to $7.7 billion in August, pushing global holdings to a record 4,189 metric tons. However, the asset class now faces significant headwinds as the Federal Reserve's rate hikes have pushed 10-year real yields to 2.68%, increasing the opportunity cost of holding non-yielding bullion.
Gold is a non-yielding asset; when real yields on government bonds rise, the opportunity cost of holding gold increases, making interest-bearing assets more attractive to investors.