Gold ETF holdings dropped to 2,950 tonnes this week, down 1.2%, as institutional investors continued reducing precious metals exposure. The outflows accelerated after the Federal Reserve's June meeting minutes reinforced a higher-for-longer rate stance, pushing real yields higher.
The sell-off has been broad-based across precious metals, with silver and platinum also declining. The gold-silver ratio widened to 67:1, suggesting silver has underperformed gold in the current correction.
Despite the ETF outflows, physical gold demand remains robust. The LBMA reported higher clearing volumes, and the premium on the Shanghai Gold Exchange expanded to $28/oz, indicating strong Chinese buying interest at current levels.
Central banks added 48 tonnes of gold to their reserves in May, according to IMF data. The buying continues a trend that saw central banks purchase over 1,000 tonnes annually for the past three years, providing a significant demand floor.
Speculative positioning on COMEX has shifted from net long to near-neutral, suggesting that much of the selling pressure may have already been absorbed. Managed money accounts reduced their long positions by 15% last week.
ETF outflows create temporary price pressure, but physical demand from central banks and Asian buyers supports the downside. Buyers who can take physical delivery should consider accumulating near $4,100/oz. For financial hedges, wait for a stabilization in ETF flows before committing.