Market Update: Why Is the Gold Price Falling While Demand Remains Exceptionally High? - Holland Gold

AI desk brief

Gold is under pressure despite strong physical demand: in September, investors added $10 billion to gold ETFs and global holdings rose 67 tonnes, while central banks bought roughly 63 tonnes net, the largest monthly tally since November 2024. Even so, the paper market dominated price action, with COMEX-linked fund positions reduced by the equivalent of 84 tonnes as gold fell 8.5% in the month.

The article points to three near-term headwinds: high nominal and real yields, a more hawkish Fed backdrop after hotter US inflation data, and a Brent spike above $111/bbl that revives inflation concerns but also keeps further tightening risk alive. French fiscal stress, wider France-Germany bond spreads near 1.6 percentage points, and ongoing reserve diversification away from the USD remain supportive over a longer horizon, but near-term futures positioning appears to be outweighing physical buying.