European investors have been selling out of gold ETFs, according to figures from the World Gold Council, with the price of the shiny metal falling back below the $1,300/oz mark during September.
According to the data, European ETF holders sold some 423,000 oz worth of gold funds, causing a 0.6% dip in the total assets under management in European-domiciled gold ETFs.
At the start of September, the gold price had risen to $1,350/oz, but by the end of the month it fell back to $1,280/oz, the level it was at in mid-August.
Meanwhile, the US dollar, which is usually inversely correlated to gold, has seen renewed strength, rising at the beginning of October as investors look ahead to a potential interest rate hike by the Federal Reserve by the end of 2017.
The low demand for gold comes despite escalating geopolitical tensions last month between the US and North Korea, as investors seem to be unconcerned about the outlook for global economies. European investors also appear to have shrugged off the outcome of the German elections, despite the right-wing Alternatives for Germany (AfD) party winning its first seats in parliament.
However, the European sell-off in gold came in stark contrast to North American ETF investors, who added 1.27m ounces of gold to their holdings during the month of September, increasing the overall assets to 4.7%, according to World Gold Council data.
Investors will now be watching the US central bank for signals of a potential interest rate rise in December, which would push the US dollar to higher levels and consequently put further downward pressure on the price of the precious metal.
Over the year to 6 October, the price of gold bullion has risen some 9%. However, gold commodities ETFs are on average down 1.6% year-to-date, according to TrackInsight.
Across the gold ETFs analysed by TrackInsight, which cover both US and European-domiciled products, there have been outflows in recent days, with around €342m exiting these products on 2-3 October 2017.
However, cumulative flows this year-to-date still amount to €3.6bn, suggesting there has been strong demand for the precious metal in a year of political and economic uncertainty.