Asian Funds Add a Record $12.4 Billion to Gold ETFs as North America Sells Ahead of the Fed Decision

• Spot gold rose 0.9% to a two-week high of $4,112.29 per ounce as Mideast tensions and positioning ahead of next week's Fed meeting increased safe-haven demand.
• Physically backed gold ETFs lost $8.9 billion in June, cutting global assets under management 13% to $526 billion, although first-half net inflows remained positive at $8 billion.
• North American gold ETFs lost $7.7 billion in H1, their weakest six-month flow since 2013, while Asian funds attracted a record $12.4 billion.
• COMEX net longs rose 16% from May to 538 tonnes in June, the highest since January, showing institutional traders added exposure despite weaker gold prices.
• CME FedWatch prices 67% odds of a September hike, the event that would push gold back toward the $4,000 floor.

Mideast Tensions & Fed Expectations Lift Gold as Lower ETF Holdings Weaken Rally Support

Spot gold rose 0.9% to a two-week high of $4,112.29 per ounce, while August US gold futures gained 1% to $4,116.80. Mideast tensions and positioning ahead of next week's Fed meeting increased safe-haven demand for gold.

The rally followed June outflows of $8.9 billion from physically backed gold ETFs, cutting global assets under management 13% to $526 billion and reducing holdings by 74 tonnes to 4,047 tonnes. July's rebound follows a 13% decline in ETF assets under management, leaving less capital to support higher gold prices.

Red Sea Disruptions Lift Oil Prices & Support Gold, but Higher Real Yields Limit Upside

Three tankers carrying Saudi crude to China and India reversed course in the Red Sea after Houthi threats, helping drive oil prices more than 3% higher. Higher oil prices can lift inflation expectations, supporting gold until higher interest-rate expectations increase the opportunity cost of holding bullion. 

The US remains open to negotiations with Iran, although officials said Tehran is not engaging seriously, leaving geopolitical risk elevated. Fed Chair Warsh's hawkish stance and the US-Iran conflict pushed real yields higher and strengthened the dollar, increasing the opportunity cost of holding gold.

67% September Hike Odds Put Gold's $4,000 Support Level at Risk if the Fed Turns Hawkish

Gold is holding technical support at $4,000 per ounce despite uncertainty over oil prices and the Fed. After outlining the setup, ActivTrades senior analyst Ricardo Evangelista said the rebound still faces near-term headwinds. A Reuters poll expects the Fed to hold rates steady through 2026, while CME FedWatch implies a 67% probability of a September hike, making next week's Fed meeting the key catalyst for gold.

Base case: The Fed holds rates steady next week, keeping gold between $4,000 and $4,116.80 through September.

Bear case: A September rate hike strengthens the dollar and pushes gold back toward the $4,000 support level, increasing the risk of additional North American ETF outflows.

Bull case: Failed Iran talks and further Houthi attacks disrupt Red Sea shipping, lifting oil prices and driving gold above $4,116.80 through stronger safe-haven demand.

Fed Expectations Strengthen the Dollar & Pressure Gold as Exporters Face Currency Headwinds

Dollar strength affects both gold prices and companies with dollar exposure. OPmobility said a €136 million dollar-related currency headwind contributed to a 2.4% decline in first-half revenue to €5.20 billion, illustrating how a stronger dollar can pressure exporters as well as gold. 

OPmobility maintained its 2026 outlook despite the currency hit, suggesting globally diversified companies can better absorb dollar swings than smaller exporters. Next week's Fed statement will determine whether markets move toward the 67% probability of a September hike or the steady-rate base case, so one week's price move does not confirm either outcome.

67% September Hike Odds Threaten Gold at $4,000 as ETF Flows Test the Bullish Case

The $4,000 per ounce level remains gold's key technical support. ActivTrades senior analyst Ricardo Evangelista said the rebound can continue while that support holds despite uncertainty over the Fed and oil prices. A September rate hike, which CME FedWatch assigns a 67% probability, could strengthen the dollar and push gold back toward the $4,000 support level, increasing the risk of further North American ETF outflows. 

Key indicators are next week's Fed statement, CME FedWatch rate expectations, and the next World Gold Council ETF report, which will show whether the gap between North American and Asian ETF flows narrows or widens.