Why Did Gold Drop More Than 8% While Funds Injected 70 Tons?

The World Gold Council described the month of September as exceptional, as the dollar price of gold fell by more than 8% at the same time that global gold exchange-traded funds attracted over 70 tons of inflows. The Council noted in its weekly report that it had not previously observed a month combining two movements of this magnitude.

According to the Council's data, this decline ranks in the 93rd percentile in magnitude among monthly drops, while the increase in fund holdings ranks in the 77th percentile among monthly inflows, based on month-end changes in holdings and London price returns from January 2004 to September 2026.

The Council attributes this divergence to investor behavior across different instruments. On the COMEX exchange, speculative positions (managed money) fell by the equivalent of 84 tons, and spread positions related to differences between contract months dropped by the equivalent of 156 tons, illustrating how prices fell despite strong demand for funds.

Against the economic backdrop, geopolitical tension and energy markets remained in focus, while investors watched U.S. data to gauge the path of monetary policy. A weaker-than-expected jobs report and sticky consumer inflation contributed to reduced expectations of near-term rate hikes, while inflation accelerated in the Eurozone and Tokyo, China announced new measures to support growth, and the Reserve Bank of Australia raised interest rates. Global markets ended the week mixed, with bond yields and the dollar rising and oil prices declining.

What Do These Terms Mean?

World Gold Council: An organization representing the global gold mining sector that publishes regular market data and reports, including the weekly market monitor report.

COMEX: A New York exchange where futures contracts for gold, silver, and other metals are traded, serving as a reference for daily settlement prices.

Managed Money (Speculative Positions): Net positions built by funds and traders in futures contracts based on price expectations, and their decline indicates a reduction in bullish bets.

Exchange-Traded Fund (ETF): A fund traded on an exchange that tracks the price of gold, with changes in its holdings serving as an indicator of institutional and retail investor demand.