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Although physical investment in gold bars and coins improved compared with a year earlier, it was not enough to compensate for substantial ETF withdrawals that dominated the quarter.

ETF Outflows Were the Biggest Reason Behind the Decline

The report highlights that ETF outflows were the primary factor responsible for the sharp fall in US gold demand.

Overall US gold demand declined to 7.9 tonnes in Q2 2026, far below the country’s long-term quarterly average of around 90 tonnes.

The biggest drag came from US-listed physically backed gold ETFs, which recorded another major wave of selling in June. Holdings declined by 40 tonnes during the month, following relatively stable flows in April and May.

According to WGC, the Q2 pullback was largely driven by short-term investment behaviour rather than weakness across the broader gold market, as positive demand from other sectors could not offset ETF liquidation.

ETF Selling Was Concentrated, Not Continuous

One of the key findings in the report is that ETF weakness was concentrated rather than persistent throughout the first half of 2026.

Most of the selling occurred during March and June, representing two separate liquidation episodes instead of a prolonged investor exit from gold.

WGC noted that if these two months are excluded, US gold-backed ETFs would actually have recorded net inflows of around 65 tonnes during the first half of the year.

This suggests that investors were primarily reacting to specific market events instead of abandoning gold as a long-term investment.

Why Investors Sold Gold ETFs

The report identifies several factors that encouraged ETF outflows during H1 2026:

• Investors reduced portfolio risk and booked profits after gold reached record highs.
• Rising US Treasury yields and a stronger US Dollar increased the opportunity cost of holding gold.
• Expectations that the US Federal Reserve would keep interest rates higher for longer weakened ETF demand.
• Gold’s price correction in June also encouraged short-term liquidation.

Despite these pressures, WGC believes the ETF selling reflected temporary portfolio adjustments rather than a structural shift away from gold.

Bar and Coin Investment Improved

While ETF demand weakened, physical investment in gold bars and coins showed encouraging signs of resilience. Demand increased compared with the same period last year as many investors used price corrections as buying opportunities.

However, purchases moderated from the exceptionally strong first quarter because gold prices remained largely range-bound during Q2.

According to WGC, two-way trading remained active, with some investors taking profits while long-term buyers accumulated gold during market pullbacks.

Jewellery Demand Remained Under Pressure

High gold prices continued to affect jewellery purchases across the United States.

Consumers increasingly shifted toward:

• Lighter-weight jewellery
• Lower-karat products
• Affordable designs

The report noted that luxury jewellery remained relatively resilient, while the mass-market segment experienced the sharpest slowdown.

Although jewellery volumes declined, the overall value of jewellery sales increased because of elevated gold prices.

Technology Demand Stayed Stable

Gold demand from the technology sector remained relatively steady. Growing demand from the electronics industry helped offset weakness in industrial applications such as dentistry, where higher bullion prices increased manufacturing costs.

Retail Investors Continued to Prefer Gold

WGC’s discussions with North American bullion dealers revealed that gold remained more popular than silver among retail investors during Q2.

Key retail trends included:

• Trading activity returned to more normal levels after exceptionally high volumes earlier in the year.
• Long-term investors continued to book profits at record prices.
• Many investors bought gold during temporary price declines.
• Investment bars remained the preferred product because they offered greater gold exposure per dollar invested.

Investment Expected to Remain the Main Driver of Demand

Looking ahead, the World Gold Council believes investment demand will continue to be the primary source of growth for the US gold market.

Persistent geopolitical uncertainty is expected to support investor interest in gold. However, WGC cautions that ETF flows are likely to remain highly sensitive to:

• US Treasury yields
• Federal Reserve policy expectations
• Strength of the US Dollar
• Global geopolitical developments

As a result, while short-term ETF flows may remain volatile, the Council believes the long-term strategic case for gold remains firmly intact.

FAQs

1. Why did US gold demand decline in Q2 2026?

The main reason was significant outflows from US-listed physically backed gold ETFs. Although demand for bars, coins, jewellery, and technology provided some support, it was insufficient to offset the large ETF withdrawals.

2. Were ETF outflows consistent throughout the first half of 2026?

No. The World Gold Council said most ETF selling was concentrated in March and June, indicating two distinct liquidation events rather than continuous investor selling throughout the period.

3. Did physical gold investment improve during Q2 2026?

Yes. Demand for gold bars and coins increased compared with the same period last year, as many investors used price corrections to accumulate gold. However, investment moderated compared with the exceptionally strong first quarter.

4. How did high gold prices affect jewellery demand?

Higher bullion prices continued to reduce jewellery volumes, with consumers increasingly choosing lighter-weight and lower-karat products. Premium jewellery performed relatively better than the mass-market segment.

5. What is the World Gold Council’s outlook for US gold demand?

WGC expects investment demand to remain the primary growth driver. While ETF flows could remain volatile due to interest rates, bond yields, and the US Dollar, geopolitical uncertainty and long-term portfolio diversification are expected to continue supporting gold demand.

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