Gold is trading at record highs of US$2,560 an ounce and is one of the best performing commodities year-to-date, up 24.5%. So why is gold soaring? Lower rates: ECB cut rates for a second time on Thursday and the Fed is widely expected to cut rates by at 25 bps next week. Lower interest rates makes gold more appealing since the yellow metal does not have any yield. Uncertainties: Persistent geopolitical tensions, US elections and wobbly economic data is also driving demand for safe havens. ETF flows: Gold-backed ETFs experienced their strongest month of inflows since April 2022, attracting US$3.7 billion, the third consecutive monthly inflow. This marks the third consecutive month of positive inflows, signalling a shift in sentiment among both institutional and individual investors after twelve months of outflows through April 2023.
The ETF data is run by the World Gold Council, which noted significant events affecting gold ETF inflows in July. Political turmoil, including an assassination attempt on Trump and Biden's withdrawal from the presidential race, drove increased safe-haven demand for gold. In parallel, economic factors such as falling inflation, a cooling labour market and Fed Chair Powell's hint at a potential September rate cut intensified expectations of monetary easing. These developments led to falling US Treasury yields and a weakening dollar, pushing gold prices to record highs and spurring investor interest in gold ETFs. | 
