Gold price hits a new high over US$3,700 as ASX ETFs flows hit record levels

Demand for gold is rising to unprecedented levels, with the gold price setting a fresh record over US$3,700 overnight, with demand stoked by expectations of a cut in official US interest rates next week and as investors sell down the US dollar.

Gold prices have hit a fresh high of US$3,715 and a rise over US$4,000 is now being anticipated, driven by several factors, including lower US interest rates, stagflation fears and geopolitical tensions, all of which are adding to gold demand from central banks and ETF buying.

As the gold price rises, Global X expects that Australian investors could pour record inflows into gold exchange traded funds (ETFs) listed on the ASX in 2025. Investors directed $660.3 million in net inflows to physical gold ETFs listed on the ASX over the year to September 5; over half of that, or $369.1 million, has been invested in Global X’s suite of gold ETFs.

“Given the strong momentum and constructive environment for gold, it is highly possible that we could see a record year for physical gold ETF inflows in Australia this year. While the $660 million figure is not yet record-breaking, flows are on-pace to exceed the record year of 2020 where we saw $982 million in net inflows into physical gold ETFs,” Global X Investment Strategist Justin Lin said.

Global X expects gold and silver prices to keep climbing as lower interest rates reduce the opportunity cost of holding gold, making it more attractive compared with yielding assets such as government bonds or cash investments. “We expect gold to head even higher as we are seeing a strong secular bull market. Our year-end gold price target is US$4000 per ounce,” he said.

Australia is home to the first gold exchange traded product in the world, with Global X launching Global X Physical Gold Structured (GOLD) in 2003. Global X is the largest provider of precious metals ETFs in Australia, which has helped it to capture near-record allocations to gold ETFs from Australian investors. This year, the firm also launched a currency hedged physical gold ETF, the Global X Gold Bullion (Currency Hedged) ETF (GHLD).

According to Lin, over the past two years, most gold demand has come from new entrants such as Asian/Chinese ETFs investors along with sustained central bank accumulation.

“Western ETF participation, by contrast, has been low. Looking back over the past 20 years, global ETF inflows have typically risen when real yields and interest rates moved down. With rate cuts increasingly expected by September, there is now a strong catalyst for under-allocated Western investors to step in and start accumulating gold, potentially adding a new leg of demand to an already strong market,” Lin said.

“The US dollar remains under pressure this year, as US President Trump ramps up his attacks on the US Fed’s independence. History shows that an independent central bank is more effective at keeping inflation under control, maximising employment and ultimately supporting a stronger local currency. A weaker USD tends to be positive for gold.”

“While some investors might turn to gold bars from the local mint for investment, ETFs provide a much simpler way to access commodities like gold and silver with daily liquidity and not having to worry about storage/insurance.”