ETF Gold holdings surged to record high in August

Gold flowed into ETFs from every region last month, pushing global holdings to a record high.

ETFs globally added 121 net tonnes of gold to their holdings in August. That pushed total ETF gold reserves to 4,189 tonnes.

Putting that into perspective, ETFs globally held 3,915 tonnes of gold at the height of the COVID bull market.

Total assets under management (AUM) by gold-backed funds rose 16 percent month-on-month to $615 billion in August.

Year-to-date, ETFs have added a net 160 tonnes of gold to their collective holdings valued at $29 billion.

For the second-straight month, European ETFs led the way, adding 54.2 tonnes of gold to their holdings, valued at $7.9 billion. It was the strongest month for European gold ETFs on record.

Like in the U.S., European investors are becoming increasingly worried about government debt loads. According to the World Gold Council, “Against this backdrop, gold's role as a portfolio diversifier and an alternative to sovereign debt likely remained an important driver of demand.”

Funds listed in the UK were the largest contributors to European gold inflows, recording the second-largest month of gold accumulation on record. Meanwhile, French funds added $1.5 billion in August, the strongest month on record. According to the World Gold Council, this “further underscores the breadth of investor demand across the region.”

North American gold-backed funds added 53.3 tonnes of gold to their holdings, valued at $7.7 billion. It was the region’s third-largest monthly inflow on record.

The month started slowly and then accelerated during the week of August 17. According to the World Gold Council, North American funds added more than half of the month’s total gold inflow in just five days.

The spike in gold flows occurred around the same time the U.S. Treasury Department announced plans to double its buyback of long-term bonds, an effort widely viewed as an attempt to control borrowing costs. The World Gold Council said this intervention “heightened concerns around fiscal sustainability and dominance, while reviving fears of potential dollar debasement.”

Asian funds charted their strongest month since February, adding 13.3 tonnes of gold valued at $2 billion.

China dominated inflows, thanks to a rebounding gold price that attracted investor interest. According to the World Gold Council, “Continued declines in local government bond yields and a range-bound equity market likely provided additional support.”

Indian and Japanese funds also reported modest gold inflows.

Funds listed in other regions, including Australia and Africa, added 0.4 tonnes of gold in August. The bulk of regional demand was centered in Australia, with $190 million in gold inflows.

ETFs are a convenient way for investors to play the gold market, but owning ETF shares is not the same as holding physical gold.

ETFs are relatively liquid. You can buy or sell an ETF with a couple of mouse clicks. You don’t have to worry about transporting or storing metal. In a nutshell, they let investors play the gold market without buying full ounces of metal at the spot price. 

Since you are just buying a number on a screen, you can easily trade your ETF shares for another stock or cash whenever you want, even multiple times on the same day. Many speculative investors take advantage of this liquidity.

But while a gold ETF is a convenient way to play gold's price, you don’t possess any gold. You have paper. And you don’t know for sure that the fund has all the gold either, especially when it sees inflows. In such a scenario, there have been difficulties or delays in obtaining physical metal.

Trading volumes

Gold market activity rebounded in August, with average daily trading volumes rising 21 percent month-on-month to $430 billion per day across all major market segments.

Over-the-counter (OTC) trading volumes rose 10 percent on the month to $226 billion per day. LBMA activity supported OTC trading, with an 11 percent month-on-month increase to $199 billion per day. This is well above the 2025 average.

Total COMEX longs rose sharply by 39 percent to 753 tonnes.

Managed money continued rebuilding its position, with net longs increasing by 96 tonnes. This pushed managed money net longs to 470 tonnes, surpassing its earlier year-to-date peak of 443 tonnes.