(MENAFN- Khaleej Times)

Gold is entering the final quarter of 2025 with powerful tailwinds, following a record-breaking third quarter for gold-backed exchange-traded funds (ETFs) and a surge in trading volumes. With macroeconomic uncertainty, central bank policy shifts, and geopolitical tensions continuing to dominate headlines, analysts expect gold to remain a favoured safe-haven asset in Q4.

According to the World Gold Council, global physically backed gold ETFs saw their largest monthly inflow in September, contributing to a record quarterly total of $26 billion. This marks the strongest quarter ever for gold ETF inflows, surpassing previous highs set during the pandemic-era gold rush in 2020.

Recommended For You UAE jobs: SWFs, central banks, pension funds employ 11,000 in GCC

Total assets under management (AUM) for gold ETFs reached $472 billion, a 23 per cent increase quarter-on-quarter, while holdings rose to 3,838 tonnes, just 2 per cent below the all-time peak recorded in November 2020.

North America and Europe lead the charge

North American investors were the primary drivers of Q3 inflows, contributing $16.1 billion, the region's largest third-quarter performance and second-largest quarterly inflow on record. European funds followed with $8.2 billion, just shy of their Q1 2020 record. The UK, Switzerland, and Germany led European activity, reflecting strong investor appetite amid rising inflation and stagnant growth.

Asia saw more modest but still positive flows of $1.7 billion, with India, China, and Japan leading the region. India alone contributed $902 million in September, driven by favorable currency dynamics and increased demand for safe-haven assets amid weak domestic equities and persistent geopolitical risks.

Gold price rally fuels momentum

The gold price continued its upward trajectory in September, setting 13 new all-time highs during the month. This rally has been fueled by a combination of factors:

-p

Geopolitical and policy uncertainty, including the US government shutdown and ongoing trade tensions.

-p

Dollar weakness, which has made gold more attractive to international investors.

-p

Expectations of lower interest rates, with the Federal Reserve cutting rates by 25 basis points in September and markets pricing in one to two more cuts by year-end.

-p

Equity market concerns, as investors hedge against potential pullbacks following record highs.

These dynamics have boosted investor interest in gold, both as a hedge against inflation and as a strategic allocation amid rising volatility.

Trading volumes surge across the board

Gold market trading volumes averaged $388 billion per day in September, up 34 per cent month-on-month, marking the second strongest month of 2025. Exchange-traded volumes rose 66 per cent, led by COMEX and the Shanghai Futures Exchange, while over-the-counter (OTC) volumes climbed 12 per cent. ETF trading volumes exploded, reaching $8 billion per day, with North American funds accounting for 78 per cent of the activity.

COMEX net long positions rose 23 per cent to 806 tonnes, with money manager positions up 7 per cent and other net longs increasing 33 per cent - the highest level since September 2022. This reflects growing investor conviction in gold's upside potential.

Q4 outlook: Bullish sentiment prevails

Looking ahead, the outlook for gold in Q4 remains bullish. The combination of macroeconomic instability, central bank caution, and strong technical momentum suggests that gold could continue to attract inflows. If current trends persist, 2025 could become a record year for gold ETF demand, surpassing even the pandemic-driven surge of 2020.

European investors are expected to remain active amid stagflation fears and policy uncertainty, while Asian demand may strengthen further if local currencies remain supportive. In the U.S., political gridlock and fiscal concerns could continue to weigh on the dollar, reinforcing gold's appeal.

With gold prices repeatedly breaking records and trading volumes surging, the metal appears well-positioned to maintain its upward trajectory through the final months of the year.

MENAFN08102025000049011007ID1110170617