Gold price drops 25% since US-Iran war begins as investors flock to ETFs despite yields

Gold has lost nearly a quarter of its value since the US-Iran war began, briefly falling to $3,975 an ounce on Friday. Despite the price decline, gold ETF holdings have surged to nearly 102 million troy ounces, their highest level since mid-2022, driven by record $31 billion in inflows in Q3 and 14 consecutive weeks of net inflows into physical-gold backed ETFs. However, weekly outflows resumed in the week of October 19, and the largest US fund GLD lost $2.3 billion over five days. Money managers have reduced bullish futures positions to a net 104,206 contracts, while higher US interest rates and inflation fears continue to pressure gold's appeal as a non-yielding asset.