Analysts at Heraeus Precious Metals note that holdings in gold and silver exchange‑traded funds (ETFs) have rebounded noticeably from last month’s lows, yet investor sentiment has not fully caught up with recent price action. According to the analysts, Iranian conflict, sticky inflation and US debt troubles may keep pushing investors back toward physical precious metals.
In its latest report, the analysts point out that gold prices surged to $5,595 per ounce at one point in late January, before suffering its deepest and most prolonged corrective phase since 2022. Even so, prices have recently climbed back above the downtrend line. Markets are now debating whether this correction has concluded or further downside remains.
Heraeus states that a consolidation phase is unsurprising after gold gained 246% across 3.5 years. The current pullback has lasted roughly six months, comparable in duration to several major corrections since 2016. While the 29% drawdown is steeper, those earlier corrections followed far smaller run‑ups. Meanwhile, gold is still trading above its rising 200‑day moving average, a technical signal that the broader uptrend remains intact.
Sentiment Cools, Yet Not At Extreme Pessimism
Analysts remark that although investor sentiment has cooled, it is unclear whether this cooling is sufficient to set the stage for another sustainable gold rally. Typically, gold is more likely to resume advancing when traders and investors lose enthusiasm or turn bearish.
They recall extreme bullishness back in January, when retail buyers across multiple countries rushed into gold, even causing local bullion shortages. Demand has since softened sharply. World Gold Council data shows global bar and coin sales fell 36% quarter‑on‑quarter in Q2 2026 to 307 tonnes. Gold ETF holdings shrank by 45 tonnes over the same period.
Non‑commercial net long positions in gold futures dropped to a recent low of 15 million ounces, down from 25 million ounces in January, yet remain well above levels seen at the end of the longer corrections in 2018 and 2022.
Central banks, by contrast, have kept buying gold. The World Gold Council Central Bank Gold Survey cites crisis‑era performance, portfolio diveRSIfication, inflation hedging and geopolitical‑risk mitigation as key motivations. Heraeus notes central‑bank gold purchases eased to 345 tonnes in H1 2026, though still above the 15‑year average.
US Debt and Inflation Underpin Long‑Term Demand
Heraeus believes investors may eventually return to gold for the same reasons driving central‑bank buying. Analysts highlight peRSIstent large‑scale US budget deficits and government debt exceeding $40 trillion, far outstripping the size of the domestic economy. The United States is far from the only nation with debt above 100% of GDP, and governments have taken no coordinated steps to cut spending and narrow deficits.
Under such conditions, debt will keep rising, alongside market worries over debt sustainability, inflation and currency depreciation. Heraeus therefore argues that despite substantial near‑term volatility, gold’s longer‑term trajectory remains tilted upward.
Regarding near‑term performance, analysts observe gold showed weakness after breaking below $4,600 per ounce, and vague Federal Reserve guidance has deprived markets of fresh directional cues. US‑Iran conflict increASIngly resembles a long‑drawn stalemate; nearly six months of hostilities and negotiations have yielded no final settlement. Iran and Oman have discussed a temporary shipping corridor and reached a framework, which still awaits US approval.
US inflation meanwhile stays elevated. July PCE price index rose 3.7% year‑on‑year, above consensus expectations of 3.6%; core PCE held steady at 3.3% YoY, matching forecasts.
Federal Reserve Chair Kevin Warsh’s debut Jackson Hole speech on August 28 failed to deliver the forward guidance markets had hoped for, continuing his cautious communication style since taking office. Warsh pointed to US economic resilience while reiterating that inflation remains too high, and gold declined afterwards.
Gold ETFs Recover Toward Year‑Start Levels
Heraeus reports gold ETF holdings have bounced off July lows alongside the gold price rebound. Registered gold ETFs bottomed at 96.2 million ounces on July 20 and have since added 2.7 million ounces (+2.8%) to 98.9 million ounces.
Over that span, gold climbed nearly 15% from roughly $4,010 per ounce to $4,600 per ounce on August 27.
This recovery brings gold ETF holdings back to the year‑opening level of 98.9 million ounces, yet about 2.0% below the 2026 peak of 100.9 million ounces set in late February. Heraeus comments that gold ETF holdings have broadly tracked price swings throughout 2026, and the latest rally has once again lured investors to boost allocations.
Spot gold traded choppy in early North‑American hours and was last quoted at $4,424.90 per ounce, down 0.68% intraday.
Silver ETFs Also See Inflows Return
On the silver front, Heraeus notes silver ETF holdings have likewise rebounded from their 2026 July trough, though inflows lag behind silver’s recent price surge.
Registered silver ETF holdings hit a low of 780.8 million ounces on July 14 and have since increased by 20.4 million ounces (+2.6%) to 801.2 million ounces.
Silver jumped 16% over the same period from $58.75 per ounce to above $68 per ounce on August 27, showing ETF investors responded positively to the rally.
Even with recent inflows, silver ETF holdings are still 62.4 million ounces (7.2%) lower than at the start of the year. The January 1 level of 863.6 million ounces marks the 2026 high. Current recovery has only reversed roughly one‑quarter of the approximate 83‑million‑ounce ETF outflow recorded between January and mid‑July.
Heraeus says silver ETF investors appear to be returning as prices strengthen, yet overall investment demand remains markedly weaker than in early 2026.
Silver pulled back after US markets opened on Monday, having formed a double top near $67.470 per ounce around 08:00 Beijing Time. Spot silver last traded at $66.282 per ounce, down 0.11% for the session.
In market terms, rebounding gold and silver ETF holdings signal investors are reassessing precious‑metal allocation value amid inflation, geopolitical friction and debt‑risk headwinds. Having registered sharp short‑term gains, gold and silver may stay highly volatile if the Federal Reserve keeps offering little clear policy direction.