Gold Continue To Slide ln September Driving Net Outflows ln Q3

1. Gold ETFs Continue To Slide In
September Driving Net Outflows In
Q3

2. Points To Be Discussed Today:
• Global Gold ETF
• Gold Daily Trading Averages Increased
• Gold Price Fluctuations During The Third Quarter
• Gold Fundamental Overview
• Gold Prices Volatile, As Non-farm Payrolls Fall
Below Expectations

3. Global Gold ETF
• Gold-backed ETFs (gold ETFs) experienced net
outflows of 15.2 tonnes (t) (-US$830mn, -0.4%
AUM) in September.
• Outflows in Europe and North America were only
partially offset by inflows in Asia.
• Global gold ETF holdings fell to 3,592t
(US$201bn) during the month – the lowest
tonnage level since April – as the gold price fell
on the back of rising yields, a stronger dollar, and
a reduction in COMEX managed money net long
positions.

4. Global Gold ETF - I

5. Global Gold ETF - II
• European gold ETFs were the primary driver of September’s
outflows, followed by North American funds. Larger funds
in the UK and Germany led outflows within Europe, which
as a whole lost 11.5t (-US$640mn).
• North America had collective outflows of 6.6t (-US$349mn)
attributed mostly to losses from large US funds.
• Outflows from both regions stemmed from central banks
announcing policy tightening going forward – the European
Central Bank from its pandemic emergency purchase
programme only, while the US Federal Reserve signalled
asset tapering in Q4 with higher expectations of interest
rate increases next year as well.

6. Global Gold ETF - III
• In contrast, Asian-listed funds ended the quarter
positive with inflows of 2.4t (US$135mn),
supported again by weakness in Chinese equities
in late September, rocked by the Evergrande
liquidity crisis.
• In addition, heightened stock market volatility
and a correction in the domestic gold price drove
holdings in Indian gold ETFs to their highest level
since September 2013.
• Other regions also contributed to global gold ETFs
with inflows of 0.4t (US$25mn).

7. Gold Ended Lower
• Gold ended the month approximately 4% lower
at US$1,743/oz.
• Our short-term price performance
model suggests that gold’s sell-off in September
was driven by changes in interest rates, a
stronger US dollar, and momentum in futures
positioning.
• Yields rose to quarterly highs in response to
central banks’ comments surrounding a likely
moderation in easy money policies.

8. Gold Daily Trading Averages Increased
• In turn this supported dollar strength as real
yields mostly increased in lockstep with nominal
yields given anchored US inflation expectations.
• This sent gold negative for the quarter, and more
than 8% lower on the year after having its worst
month since June.
• Gold daily trading averages increased to
US$146bn in September off lows of US$141bn in
August, but still below the year-to-date average
of US$160bn.

9. COMEX Volumes
• COMEX volumes only marginally increased
from year-to-date lows in August, while net
long futures positioning reflected a general
apathy towards gold as of late, reducing to
537t (US$30bn) in the second half of the
month.
• However, this remains just above the
historical weekly average level of around 500t
(US$28bn).

10. Gold Price Fluctuations During The
Third Quarter
• Gold ETF flows generally tracked gold price
fluctuations during the third quarter, led by
outflows from North American funds which lost
46.3t (-US$2.6bn, -2.4%) overall.
• North American outflows were dominated by
larger US funds, with a majority of losses coming
in August.
• European funds proved more resilient to price
declines over the period as inflation expectations
continued to notch higher, resulting in net inflows
of 15.2t (US$909mn, 1.0%).

11. Gold Price Fluctuations During The
Third Quarter - I
• This was driven by German funds which,
similar to the second quarter, represented
more than half of all flows into Europe (8.9t,
US$516mn).
• Low-cost ETFs across these regions continued
to exhibit strong growth and helped mitigate
outflows, adding a total of US$920mn (15.9t).

12. Gold Fundamental Overview
• Gold regained some positive traction on the
last trading day of the week and recovered a
part of the previous day's losses.
• The XAU/USD maintained its bid tone heading
into the European session and refreshed daily
tops, around the $1,760 region in the last
hour, though lacked follow-through.

13. Gold Fundamental Overview - I
• Concerns pertaining to China's indebted property
sector resurfaced after Fantasia Holdings – a mid-
sized developer – did not make the payment of a
$206 million bond maturing on October 3,
triggering a formal default.
• This, in turn, was seen as a key factor that
extended some support to the safe-haven
precious metal, though a combination of factors
capped gains.

14. Gold Fundamental Overview- II
• The development triggered a classic risk-on
move in the global equity markets.
• Apart from this, prospects for an early policy
tightening by the Fed should hold traders from
placing aggressive bullish bets around the
non-yielding yellow metal.
• Investors seem convinced that the Fed will
begin rolling back its massive pandemic-era
stimulus as soon as November.

15. Gold Fundamental Overview - III
• A temporary truce in the debt ceiling standoff
in the US Congress relieved concerns of a
possible government debt default later this
month and boosted investors' confidence.
• In fact, the Senate voted 50-48 to extend the
debt ceiling until early December.
• The bill will now be sent to the House of
Representatives for approval before it can be
sent to President Joe Biden for his signature.

16. Hawkish Fed Expectations
• The markets also seem to have started pricing in the
prospects for an interest rate hike in 2022 amid worries
that the continuous surge in crude oil/energy prices
will stoke inflation.
• Hawkish Fed expectations pushed the yield on the
benchmark 10-year US government bond to four-
month tops, closer to the 1.60% threshold, which
continued underpinning the US dollar.
• This could further act as a headwind for dollar-
denominated commodities, including gold, as investors
move on the sidelines ahead of the closely-watched US
monthly employment figures.

17. NFP Report
• The popularly known NFP report is due for release later
during the early North American session and is
expected to show that the economy added 488K new
jobs in September.
• Meanwhile, the unemployment rate is expected to
edge lower to 5.1% during the reported month from
5.2% in August.
• Nevertheless, the data will influence market
expectations about the next policy move by the Fed.
• This will drive the USD in the near term and provide a
fresh directional impetus to gold prices.

18. Gold Prices Volatile, As Non-farm
Payrolls Fall Below Expectations
• Markets shaken as Non-farm payrolls fall below
expectations
• Markets were left rather disappointed on Friday,
as Non-farm payrolls failed to meet expectations for
the second consecutive month.
• After being expected to come in north of 500,000,
figures from the Labor Department showed that
payrolls rose by 194,000 in September.
• The main contributor to the total was once again the
leisure and hospitality sector, which added 74,000
positions last month

19. Gold Prices Initially Spiked
• Despite the disappointing jobs number,
the unemployment rate in the United States
fell by more than expected, coming in at 4.8%
versus the expected 5.1%.
• Gold prices initially spiked by close to $20,
hitting an intraday high of $1,781, before
falling to a day’s low of $1,755.

20. Gold ETFs Continue To Slide In
September Driving Net Outflows In
Q3

21. Thanks for listening
Gold ETFs Continue To Slide In
September Driving Net Outflows In Q3