Gold ETFs have demonstrated mixed trends over the past two weeks, with inflows turning positive in the week ending July 10 at $1.8 billion but negative in the week ending July 3 at $1.51 billion, according to World Gold Council data. Led by France, the US and Australia, inflows turned positive last week, while the UK and Chinese investors exited, resulting in $0.34 billion net inflows. In contrast, the week ending July 3 saw investors in the US, China, Germany, and Canada lead exits with total encashment of $3.19 billion, though the UK and India maintained positive sentiment with $2.15 billion inflows. As per The Hindu BusinessLine, with gold prices hovering between $4,000 and $4,200 an ounce, investors have kept a low profile over the past fortnight.
Gold traded at significant discounts in India this week as price volatility weighed heavily on market sentiment. According to reports from Reuters, international spot gold prices dropped to a seven-month low in late June before rebounding, creating sharp swings that dealers cite this week. Dealers in India cut prices by up to $19 an ounce this week, with buyers now waiting for a bigger drop in prices before making purchases. Retail activity has shifted toward exchanging old jewelry for new pieces, so jewelers do not need to restock as often, which lowers demand for freshly mined bullion and keeps discounts elevated. Indian jewelry volumes fell 19% year over year in the first quarter, while investment demand for bars and coins climbed, according to World Gold Council data.
Market participants are now awaiting the US CPI inflation data due Tuesday evening, which will be a key input for the Federal Reserve's interest rate outlook and could determine the next direction for bullion. As per The Hindu BusinessLine, Renisha Chainani, head of research at Augmont, noted that gold lost ground last week, giving up its brief rebound as renewed US-Iran military strikes stirred fresh inflation worries and pushed up the odds of another Fed rate hike. Jateen Trivedi, VP Research Analyst at LKP Securities, explained that a higher-than-expected inflation reading may strengthen the dollar further and keep pressure on gold, while softer inflation could support a recovery. The 65% probability of a September rate hike represents the single most important variable for near-term gold direction, with December odds sitting at 85%.
Regional ETF performance has shown significant variation, with North America leading outflows at $1.20 billion in the week ending June 3, followed by Asia at $206 million. In contrast, Europe saw $457 million in investments, while the week ending July 3 showed North America with $105 million inflows, Asia with $40 million outflows, and other continents contributing $113 million. As of date, ETF inflows have been negative in the US at $8.57 billion, followed by Italy at $211 million, while investments have been positive at $5.31 billion in China, $3.88 billion in India, $2.11 billion in the UK, and nearly $2 billion in Switzerland. With inflows over $900 million, Japan and the Hong Kong state-administered region have also been positive contributors to gold ETFs.
Despite recent volatility, experts recommend a staggered investment strategy in Gold ETFs rather than lump-sum investments. As per Business Standard, Satish Dondapati from Kotak Mutual Fund notes that gold prices have declined by around 26% from their January 2026 peak, leading to profit booking and short-term ETF outflows. However, fundamental factors supporting gold remain strong, with continued central bank purchases and ongoing de-dollarisation trends. Ajay Kedia from Kedia Advisory estimates gold could generate 18-20% returns over the next 12-18 months, with Gold ETFs delivering similar performance. The key drivers include rising global debt, continued central bank gold purchases, geopolitical tensions, and inflation risks. Experts recommend investors allocate only 10-15% of their portfolio to gold depending on risk profile, with Gold ETFs providing transparent, liquid, and regulated access to gold investment.
