Global physically backed gold exchange-traded funds attracted $18 billion in net inflows during August, the second-largest monthly total on record, according to data from the World Gold Council. The inflows lifted combined ETF gold holdings by 121 tonnes to an all-time high of 4,189 tonnes. Assets under management for these funds rose 16 percent to $615 billion.

Regional Breakdown of ETF Inflows

Demand was concentrated in North America and Europe. North American gold ETFs received $7.7 billion, while European-listed funds recorded $7.9 billion, their strongest monthly inflow to date. Asian funds contributed an additional $2 billion.

The capital inflows reversed earlier softness in the year and pushed total holdings above every previous peak. The move coincided with a 13 percent monthly advance in the gold price, the metal’s strongest performance since January. Market participants linked the price strength and ETF demand to concerns over U.S. government debt levels and stress in the Treasury market.

China Extends Official Gold Purchases

The People’s Bank of China purchased 20.2 tonnes of gold in August, its largest monthly addition since October 2023. Official Chinese holdings have now risen for 22 consecutive months and stand at 2,387 tonnes. Gold accounts for approximately 9 percent of the country’s foreign-exchange reserves. The August purchase nearly doubled the 10-tonne increase recorded in May.

At the same time, physical demand indicators in China remained subdued. Withdrawals from the Shanghai Gold Exchange declined 22 percent from the previous month and 27 percent from a year earlier, totaling 62 tonnes in August. The drop was attributed to softer bullion investment and continued weakness in jewellery demand. In contrast, Chinese-listed gold ETFs added 11 tonnes, bringing their holdings to 293 tonnes.

The contrast between weaker retail and jewellery activity and stronger institutional and official buying points to a shift in the drivers of gold demand within China toward central-bank accumulation and investment funds.

Broader Market Context

The combination of record ETF holdings and sustained central-bank purchases has occurred against a backdrop of elevated sovereign borrowing costs and macroeconomic uncertainty. Institutional investors and official-sector buyers have continued to accumulate gold even as traditional physical consumption channels in some markets have softened.

August’s inflows and the concurrent rise in the gold price mark a clear recovery in investor interest after a quieter period earlier in the year. Holdings of physically backed gold ETFs now sit at their highest level on record, supported by broad regional participation and ongoing official purchases by China.