Funds are flowing in the same direction: capital flight! Gold ETFs are falling across the board.

International gold prices fell again to $4,000 per ounce

According to Choice data, international gold prices hit a low of $3,998.1 per ounce on June 26, a drop of more than 11% since the beginning of June.
As a result, some gold-related ETFs have seen declines of over 22% since the beginning of the year, with Ping An Gold ETF, Huaxia Gold ETF, and Guotai Gold ETF among the biggest losers.
Funds are flowing out of gold ETFs at an accelerated pace. Since June, as of June 25, nearly 2.6 billion units of gold ETFs have been redeemed. Among them, Yongying Gold ETF, the largest gold stock ETF in the equity category, and Huaan Gold ETF, the "jumbo" of commodity gold ETFs, have seen the largest net redemptions, exceeding 900 million and 600 million units respectively.
In terms of size, Huaan Gold ETF has fallen from over 100 billion yuan to 87.5 billion yuan; Yongying Gold Stock ETF has also shrunk from over 10 billion yuan to around 8 billion yuan.

Why is gold prices continuing to fall?
Cathay Fund believes that the current weakness in gold prices is the result of multiple negative factors converging, weakening the logic that previously supported the rise in gold prices.
First, expectations of a Federal Reserve rate hike are rising. Data from the FedWatch tool shows that the probability of a Fed rate hike in December is approximately 86.1%. As a non-interest-bearing asset, gold's attractiveness will be directly reduced by rising interest rates, driving funds away from gold and towards other higher-yielding assets.
Secondly, the US dollar index continues to strengthen. It has rebounded from around 97 points to around 101 points. Since international gold is priced in US dollars, a stronger dollar directly suppresses the nominal price of gold.
Finally, risk aversion and demand for inflation protection cooled. As geopolitical tensions eased, market demand for safe-haven assets decreased; coupled with a decline in international oil prices, market inflation expectations cooled simultaneously, reducing gold's value as an inflation hedge and further weakening bullish support.
In addition, Cathay Fund added that gold had previously experienced a long period of one-sided upward movement, accumulating considerable profits. During the market correction phase, a large number of long positions took profits and left the market, which exacerbated the short-term downward pressure on gold prices.
Regarding future investments, Liu Tingyu, the fund manager of Yongying Gold Stock ETF, told the Shanghai Securities News that the expectation of interest rate hikes and the recurring geopolitical situation may amplify short-term fluctuations in gold prices. However, in the medium to long term, the logic of US deficit expansion, global de-dollarization, and central bank gold purchase demand remains unchanged, and the cost-effectiveness of gold stocks will improve after the adjustment.