Spot gold collapsed below the psychologically critical $4,000 per ounce level on Thursday, marking a sharp 1.9% decline as a perfect storm of record-breaking ETF outflows, resilient US consumer spending, and surging oil prices crushed demand for the non-yielding asset. The precious metal last traded near $3,981, extending its slide from January’s historic peak to about 28%, according to market data.
Massive gold ETF exodus accelerates: The SPDR Gold Shares ETF (GLD), the largest gold-backed fund in the US, has hemorrhaged $14.4 billion since March 1, according to The Kobeissi Letter. This is roughly 50% more than the $9.6 billion withdrawn from all US Bitcoin ETFs since their October peak. March alone saw a record monthly outflow of $8.5 billion, followed by $1.7 billion in April, $872 million in May, $3.2 billion in June, and a slower $46 million so far in July. The relentless investor flight from gold ETFs is the primary driver of the price drop.
Oil and dollar pile on pressure: Brent crude held near $84.80 a barrel and WTI around $79.50, extending gains amid escalating Middle East tensions. The US expanded attacks on Iran, and Iran retaliated with strikes on Bahrain, Jordan, and Kuwait. While geopolitical turmoil often supports gold, the resulting oil price spike lifted inflation expectations and kept the US dollar strong. A stronger dollar makes dollar-denominated gold more expensive for foreign buyers and reinforces the allure of yield-bearing alternatives. The US retail sales report showed headline sales rose 0.2% in June, matching expectations, but core sales fell 0.2%, hinting at consumer weakness beneath the surface. Even as June’s CPI slowed to 3.5%, persistent energy costs kept the Federal Reserve’s rate outlook uncertain, with Fed Chair Kevin Warsh’s hawkish stance still resonating.
Institutional “reload” thesis: Economist Matthew Piepenburg argues the selloff is being engineered by large financial players—including CME and the London bullion market—to reload positions at suppressed prices. He points to continued central bank buying of more than 200 tonnes quarterly since 2022 and a growing role for physical gold as collateral in global finance. This contrasts with the short-term bearish narrative but suggests the decline could be temporary if institutional demand eventually reasserts itself.
For now, gold remains trapped between weak investment flows and underlying institutional interest, with the next direction likely determined by oil prices, dollar moves, and whether ETF outflows stabilize in the coming weeks.
