Key Takeaways:
Galaxy Securities says global gold ETFs may ramp up purchases amid rising Fed rate cut expectations.
Increased ETF inflows could support higher gold prices in the near term.
Market sentiment continues to shift toward interest-rate-sensitive assets.
Gold ETF Demand May Rise as Rate Cut Bets Strengthen
Global gold exchange-traded funds (ETFs) may see renewed buying momentum as expectations grow for a U.S. Federal Reserve interest rate cut, according to a research note from Galaxy Securities, cited by Jinshi Data.
The report suggests that the increasing probability of Fed rate cuts could lead gold ETF managers to maintain or increase their holdings, providing a tailwind for gold prices in the coming weeks.
Rate Cuts Make Gold More Attractive
As an interest-free asset, gold tends to benefit when central banks pivot toward easing monetary policy. With U.S. economic data showing signs of slowing job growth and moderating inflation, markets are increasingly pricing in a 25 basis point Fed rate cut as early as September.
The CME FedWatch tool currently places the probability of a September rate cut at over 89%, which could encourage more institutional demand for gold ETFs, often used as a hedge against both inflation and economic uncertainty.
ETF Flows Are a Key Driver of Gold Price Stability
Gold ETFs play a significant role in the global gold market, and sustained inflows typically reflect investor confidence in the metal's role as a safe-haven asset. Rising expectations of lower U.S. interest rates could result in fresh capital flowing into gold-backed funds, supporting not just the price of gold but also the broader precious metals sector.
Galaxy Securities emphasized that ETF accumulation is a key technical support for gold in uncertain macroeconomic conditions.