Warsh's Hawkish Speech Crushes Gold ETF Rally

Gold ETF inflows reversed course in July after two months of withdrawals, with investors adding roughly $3 billion to physically backed gold ETFs. The SPDR Gold MiniShares Trust (GLDM) benefited from this trend and is still up 30% over the past year.

The July rebound was regionally lopsided, with Europe supplying around $2 billion and Asia contributing another $616 million in inflows. North America added only $71 million, remaining in net outflow territory for 2026.

However, a hawkish speech from Fed Chair Kevin Warsh on August 28 put the comeback in question, causing GLDM to drop around 3% on the day and roughly 3% for the week. The dollar strengthened, Treasury yields rose, and real yields did significant damage to gold's opportunity cost.

The bear case has a weak spot, as the broad U.S. dollar index recently sat near 118, down about 2% from a month earlier. A softer dollar is gold's most reliable tailwind, and central-bank buying underpins the price floor, largely indifferent to a single speech.

GLDM's structural pitch remains real, ranking among the cheapest ways to own physical gold as a hedge against dollar weakness and real-rate compression. A 5% to 10% GLDM sleeve is defensible for investors seeking dollar and inflation insurance, accepting that the fund produces no income.