In October, Gold ETFs experienced significant inflows, reaching a five-year high with an increase of 55 tons, bringing total holdings to 3,892 tons. This marks the fifth month in a row of net inflows and the ninth month in 2023, totaling nearly 674 tons since January. The growth was mainly due to ETFs in North America and Asia, while Europe saw its first outflows in five months, particularly from the UK and Germany. The largest Gold ETF in the US had the highest inflows, with four of the six top ETFs with inflows coming from China.

Chinese ETFs See Significant Inflows

Chinese ETFs saw inflows of 34 tons in October, nearly matching the outflows from Europe. This shift indicates a demand move from Europe to China. Bloomberg reported European ETF outflows, but excluded Chinese ETFs in its dataset, resulting in a lower net inflow of less than 10 tons. According to the World Gold Council, the US led in net inflows for the first ten months of the year, followed by China, and then Europe. Germany fell behind countries like India and Japan in ETF inflows, showing regional differences in gold investment trends. The demand for gold remains strong, with ETF holdings reaching a five-year high after five months of continued inflows in October. With holdings totaling 3,892 tons, this trend suggests solid support for gold prices, which are currently around $2,450 per ounce. The ongoing inflows through most of 2025 indicate a strong bullish trend for gold.

Sustained Demand Suggests Bullish Trend

This consistent demand means that derivative traders might want to keep or increase their long positions. Recent US CPI data shows inflation stubbornly at 3.8%, making gold a compelling hedge against inflation. Traders could use call options or long futures contracts to take advantage of potential price rises fueled by this physical demand. Notably, demand is shifting geographically, moving from Europe to North America and particularly Asia. While European ETFs faced outflows, Chinese ETFs absorbed a similar amount, indicating a new source of demand. This shift suggests that the gold rally is becoming more robust and less reliant on traditional Western investors. This trend among retail and institutional investors is echoed by central bank activity, with reports of central banks purchasing over 250 tons in the third quarter of 2025. This dual-front buying, from both ETFs and central banks, creates a strong foundation for the market. We should view any price dips as buying opportunities rather than signs of a downturn. The last time ETF holdings reached this level was in 2020, during a period of global economic uncertainty and massive monetary stimulus. This context suggests that the market is currently accounting for similar risks and hedging against potential currency devaluation. This environment supports a strategy of staying long on gold derivatives in the coming weeks. Create your live VT Markets account and start trading now.

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