Gold Prices Stuck at $4,160 Despite Record ETF Inflows

Gold prices have stalled near $4,160 an ounce despite significant investment inflows into gold-backed exchange-traded funds (ETFs). In September, US-listed gold ETFs attracted a massive $3.8 billion, following $7.9 billion in August. However, the price of gold has struggled to gain momentum, losing 6.6% in September, its worst month since June.

The contrast between investment demand and weak price action suggests that long-term investors have not abandoned bullion. Morgan Stanley's head of metals and mining strategy, Amy Gower, noted that ETF demand remains resilient, even as markets anticipated Federal Reserve tightening. Gower also pointed to central-bank buying, particularly from China, and said Morgan Stanley sees $4,000 an ounce as a floor.

Algorithmic and momentum funds have reversed their positions after August's rally, which has led to selling pressure in gold miners (GDX). Peter Grant of Zaner Metals warned that there are 'fairly significant headwinds for gold,' citing elevated Treasury yields, dollar strength, and expectations for further Fed tightening. Oil prices have also contributed to the challenge facing gold investors, as Brent eased to about $98 but still gained roughly 14% in September.