Most retail investors "missed out" on the gold rush, is it too late to chase after the rise?

According to Zhitong Finance, spot gold has been rising since the end of 2022, with an increase of about 13% last year and a further 27% from the beginning of this year. However, analysis by Bank of America on gold ETFs shows that retail investors have missed out on this amazing rally. According to Bank of America's data, gold ETFs have seen a cumulative outflow of $24 billion since reaching a peak in purchases in October 2020.

Bank of America points out that retail investors have missed out on the rise in gold for the first time since the establishment of the world's largest physically backed gold ETF - SPDR Gold Shares (GLD.US). SPDR Gold ETF manages around 876 tons of physical gold, valued at over $74 billion.

The above image shows that the cumulative inflow of funds into gold ETFs peaked in October 2020. That year, amid the economic impact of the COVID-19 pandemic, market participants flocked to safe assets such as precious metals. However, since October 2020, outflows from gold ETFs have reached $24 billion. During this period, spot gold rose by 39.4%. Meanwhile, SPDR Gold ETF rose by 37.6%.

Spot gold hit a historical high of over $2,700 per ounce at the end of September. In 2023, uncertainty over Fed rate cuts and geopolitical risks boosted the price of gold. In 2024, the Fed finally cut rates, further boosting the price of gold. Seeking Alpha analyst Dani Schijveschuurder emphasized that while the S&P 500 index has returned approximately 34% over the past three years, gold has risen by about 50.5%.

Furthermore, according to Seeking Alpha analyst Real Investments, if the debt-to-GDP ratio exceeds 132.8%, investors should expect trouble for the U.S. government and therefore buy gold. Data from the U.S. Debt Clock shows that as of the third quarter, the U.S. debt-to-GDP ratio is 129.6%, but it is expected to reach 133.80% by the first quarter of 2026.

Real Investments wrote last Friday: "A weakening dollar will pose significant challenges to the U.S. government's efforts to finance its debt through bond sales. This will lead to higher borrowing costs, reduced demand, and potential economic consequences. Needless to say, a weaker dollar will also be a strong driver for the price of gold."

World Gold Council: Gold ETF inflows have increased for the fifth consecutive month

Against this backdrop, investors seem to be chasing the rally. According to a report by the World Gold Council (WGC) on Tuesday, globally, physically backed gold exchange-traded funds (ETFs) saw fund inflows for the fifth consecutive month in September, mainly driven by funds listed in North America increasing their holdings SPDR Gold Shares (黄金 ETF) stores physical gold for investors, serving as one of the key drivers of demand for precious metal investments.

In September, the inflow of funds into SPDR Gold Shares reached 18.4 metric tons, equivalent to $1.4 billion, leading to a total holding of 3,200 metric tons in global gold ETFs. According to a report by the World Gold Council (WGC), the rise in gold prices and recent fund inflows pushed the total assets under management to a monthly peak of $270.9 billion by the end of September.

WGC also estimated that global gold trading volume increased by 7% month-on-month in September, reaching a daily average of $259 billion, while over-the-counter (OTC) market trading volume rose by 10% to $176 billion per day.

With gold prices up 28% this year and expectations of future interest rate cuts in the United States strengthening, speculators increased their net long positions on COMEX by 6% to 976 metric tons by the end of September, marking the highest level since February 2020