Gold "Chain Drop", ETF Outflow: When Can We Buy the Dip?
On May 28, $XAU/USD(XAUUSD.FOREX)$briefly fell to $4,366/oz, a single heavy blow that sent it to its lowest point in nearly two months. Since the Iran war broke out at the end of February, gold has cumulatively fallen more than 17% in just three months, almost completely wiping out all of this year's gains. The more frantically people rushed to buy gold last year, the more painful being trapped is now.
Who Is the "Super Seller" Behind This?
According to more comprehensive data from the World Gold Council (WGC), global central bank gold purchases in Q1 this year actually reached as high as 244 tonnes! Central banks remain the most solid "foundation."
So who is selling like crazy? The answer is: trend-driven outflows from global gold ETFs.
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The biggest former driver has become the primary dumper: The core fuel behind gold's record highs last year was the massive inflow into ETFs (nearly 800 tonnes bought throughout the year). Yet over the past 3 months, global gold ETFs have cumulatively net-sold 45 tonnes, with North America alone madly net-selling 82 tonnes.
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The real culprit behind the drop: Data models show that of gold's roughly 12% decline since March, the "trend-driven" net outflows from ETFs alone contributed close to 4.5 percentage points, while the rise in real interest rates explains 3.5 percentage points.
The "smart money" in ETFs that sent gold to the sky last year has become the number one seller this year. The exit of the most important driving force has directly caused gold to lose its upward momentum.
Why Did ETF Money Suddenly Change Its Mind This Year?
The "grand narratives" supporting gold (fiscal collapse, geopolitical chaos, Fed losing independence) are still around — but they lack a concrete "trigger."
This year, the absolute star of global markets is only one thing — AI. In Q1, North American investors pulled a record $13 billion out of physical gold ETFs, the largest outflow ever recorded. Where did that money go? All of it flooded into Nvidia, AI infrastructure, and the compute race.
When Is the Best Time to Add to Positions?
From a technical perspective, $4,370/oz is currently gold's life-or-death line separating bull and bear.
If it can hold firmly here, gold can catch its breath and stage a volatile rebound; once it breaks below, the next line of defense retreats directly to $4,100.
Institutional views are currently in extreme conflict. JPMorgan believes this is merely "a pause in the bull market, not a reversal," still targeting $6,000 by year-end; while Citi warns to look for $4,300 in the short term, with a return to $5,000 only in the medium-to-long term.
💬 Discussion
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How do you view the divergence among major banks on gold's price outlook?
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ETF outflows: will you follow the trend or contrarian buy the dip?
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On bank views, I sit between extremes: JPMorgan’s $JPMorgan Chase(JPM)$ bullish long-term debasement case versus Citi’s $Citigroup(C)$ near-term caution from rates and AI-driven risk-on flows. I’m cautious short term but not bearish on the broader cycle.
For ETF flows, I wouldn’t follow the selling, but I also wouldn’t rush to buy. I’d wait for stabilization around $4,300–$4,400 and slowing outflows before gradually adding exposure as a hedge. I also see this as a positioning reset rather than a thesis breakdown. If macro risk sentiment shifts again, gold can reassert itself quickly.
$XAU/USD(XAUUSD.FOREX)$
$SPDR Gold Shares(GLD)$
$SPDR Gold MiniShares Trust(GLDM)$
@TigerStars @Tiger_comments @TigerClub @Tiger_SG
On ETF outflows: Contrarian buyer. Western profit-taking and rebalancing created a dip, but structural drivers (reserves, uncertainty) persist while Asia counters. Long-term bullish.
ETF outflows: the selling of units in the etf is driven by these divergent views and is an oppportunity to buy at reduced prices
Bears: Higher real yields, resilient USD, and ETF outflows. If rates stay high, gold faces a headwind.
Bulls: Central-bank buying, rising government debt, geopolitical risks, and eventual rate cuts. They see the recent correction as temporary.
For ETF outflows, I would not blindly follow them. ETF investors are often late to both tops and bottoms. More important is whether central banks continue accumulating.
My stance:
Short term: Neutral to cautious. Momentum remains weak.
Long term: Moderately bullish.
Strategy: Gradual accumulation rather than an all-in dip buy.
The signal I'd watch is ETF outflows slowing while central-bank demand stays strong. If that happens, the current correction may look more like a reset than the start of a prolonged bear market.
I'd be a selective dip buyer, not a trend follower and not an aggressive contrarian.
But the biggest culprit for gold being sold likely is the expectations of rising interest rates in USA
Just as stated, questions of fed independence makes this a funny proposition.
Does Warsh do the correct thing to try and halt the impact of inflation, or does his spine liquefy and maintains (or decreases, as prez Trunp keeps asking for) interest rates [Surprised]
Be sure to give it time. It will react with certainty.
Yes as elite institutions are quietly exploiting the dip. Just this week UBS adjusted its year end gold price target to USD 5,500, citing that Gold's long term structural bull case remains entirely intact. It regards higher bond yields as a short term cyclical headwind.
Not all central banks are selling gold. China and India are still buying Gold to de-risk their sovereign reserves.
I would continue to hold $Gold Trust Ishares(IAU)$ instead of $SPDR Gold ETF(GLD)$ as it has a lower expense ratio of 0.25% compared to GLD's 0.40%. However for traders, they would prefer GLD as it possesses an unparalleled trading liquidity being the largest Gold ETF by Assets under management.
IAU is a good tactical bet against high inflation too.
@Tiger_SG @Tiger_comments @TigerStars