Gold ETF Inflows Reverse Course as Warsh’s Hawkish Speech Crushes GLDM’s Summer Rally
Kevin Warsh just handed gold's summer rally its worst week in months, but the real question is whether one hawkish speech can undo a structural shift that sent European and Asian investors pouring billions into bullion while American buyers sat…
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The SPDR Gold MiniShares Trust (NYSEARCA:GLDM) rode a global rebound in bullion demand this summer, then reversed sharply on August 28.
Investors added roughly $3 billion to physically backed gold ETFs in July, reversing two months of withdrawals. GLDM benefited alongside its larger peers and is still up 30% over the past year.
A hawkish speech from Fed Chair Kevin Warsh has now put that comeback in question. GLDM’s job in a portfolio is narrow: cheap physical gold exposure as a hedge against dollar weakness and real-rate compression. That thesis just met resistance.
Inside the $3 Billion, Region by Region
The July rebound was regionally lopsided. Global gold ETF holdings rose by 23 metric tons to 4,068 tons, and total assets reached about $530 billion.
Europe supplied roughly $2 billion of the inflows, and Asia contributed another $616 million.
North America added only $71 million and stayed in net outflow territory for 2026. American investors, who dominate GLDM’s shareholder base, have not really returned.
GLDM’s 10% gain over the past month coincided with that overseas buying wave.
None of the $3 billion flowed exclusively into GLDM. It confirms the marginal buyer in July was overseas, which makes any U.S. reversal fragile.
Warsh’s Warning Changed the Setup
Fed Chair Kevin Warsh warned on August 28 that policymakers still had work to do against inflation. Gold fell more than 3% to about $4,567 an ounce.
GLDM dropped about 3% on the day and roughly 3% for the week. Traders raised the probability of a September rate hike to approximately 58%.
The dollar strengthened, and Treasury yields rose. The 10-year yield sits near 4.67%, close to the period high.
Real yields did the actual damage. The 10-year real yield jumped to about 2.4% from roughly 2.3% the prior session.
Gold pays nothing, so every basis point of positive real yield raises gold’s opportunity cost. Fed funds has sat at 3.75% since December 2025, so what matters is whether the market believes the Fed will hold or hike from here.
Dollar Softness and Central Banks Still Support Gold
The bear case has a weak spot. The broad U.S. dollar index recently sat near 118, down about 2% from a month earlier.
A softer dollar is gold’s most reliable tailwind, and the index’s trailing-year percentile rank of 9 shows how depressed the greenback has been. Warsh interrupted that trend rather than reversing it.
Central-bank buying, which drove much of gold’s multi-year advance, does not show up in ETF flow tables but underpins the price floor. That structural demand is largely indifferent to a single speech.
GLDM’s five-year return of about 144% was built on dollar weakness, sovereign accumulation, and negative real yields. Only the last leg has flipped hard against gold.
If Warsh’s rhetoric fails to translate into an actual September hike, real yields likely retrace, and the dollar resumes its slide.
Where GLDM Fits After the Selloff
GLDM’s structural pitch is real. It ranks among the cheapest ways to own physical gold, and peers iShares Gold Trust Micro (NYSEARCA:IAUM) and abrdn Physical Gold Shares ETF (NYSEARCA:SGOL) offer comparable economics.
The choice among them is a rounding error next to the macro call on gold itself.
A 5% to 10% GLDM sleeve is defensible for investors who want dollar and inflation insurance and accept that the fund produces no income. Treating gold as a growth allocation misreads the asset.
If you believe real yields near 2.5% are sustainable and Warsh means what he said, GLDM is early. If you believe July’s flow rebound reflects durable European and Asian demand while North America has yet to return, Friday’s selloff is the discount.
Either position is defensible. Buying GLDM as a wager on capital appreciation, absent a view on the dollar and real rates, misreads the fund.
Contact [email protected] for any questions or corrections.
Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks.
