According to published data, the SPDR Gold Trust fund has been aggressively buying gold. With 3 more tons of gold traded this week, the fund now holds 843 tons of gold. This is the second consecutive week that this “shark” has been a net buyer, with a total of 8 tons of gold traded.

Global gold ETFs are starting to respond to geopolitical risks, said Joe Cavatoni, chief market strategist for North America at the World Gold Council (WGC). The main factor affecting gold prices will be interest rate cuts from central banks.

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The "sharks" buy gold. Photo: Kitco

The WGC is closely monitoring global ETF flows as gold prices once again breached the $2,400/ounce mark. ETF holdings fell 16.2% in the second quarter, according to the WGC.

Cavatoni predicts that as the US Federal Reserve (Fed) begins to cut interest rates, the opportunity cost of holding gold will decrease. This will make gold more attractive to investors seeking safety and diversification in a low-interest-rate environment. This will be a major driver of Western investors returning to the gold market.

Earlier data showed that ETFs were net sellers for a long time amid a sharp rise in gold prices. The gold rally has temporarily subsided and investors are seizing the opportunity to buy.

Gold prices on the Kitco floor closed the trading week at $2,368/ounce. Gold futures for August 2024 traded at $2,385/ounce.

The long-term outlook for gold remains good, but the short-term technical outlook is looking difficult, said James Stanley, senior strategist at Forex.

Colin Cieszynski, chief strategist at SIA Wealth Management, said that when the Fed signals a rate cut, the USD could fall and gold prices could rise sharply. In the long term, funds could also increase their appetite for precious metals.