International News
WGC Gold Market Commentary: Positioning revisited
Gold in July saw modest gains on tariff-driven inflation expectations, though a stronger US dollar capped upside. Looking ahead, fundamentals point to rising net longs bridging the gap with COMEX prices, rather than a decline in prices.
July review
Gold edged up in July, aided by higher tariff-led inflation expectations but a stronger US dollar proved a drag
Looking forward
A gap between prices and COMEX positioning is likely to be filled by rising net longs, not falling prices, as we view fundamentals to be supportive of the former
Gold drags itself higher
Gold prices edged up 0.3% to finish July at US$3,299/oz. A stronger US dollar contributed to positive returns in all major currencies. Year-to-date, gold remains up 26% (Table 1).
Our Gold Return Attribution Model (GRAM) suggests a positive contribution from a rise in inflation expectations and tariff tensions via our geopolitical risk metric (both Risk and Uncertainty factors). Momentum factors also contributed positively, while a stronger US dollar proved a heavy drag on returns in July (Chart 1).
Gold ETF inflows of US$3.2bn (23t) were split almost equally between North America (US$1.4bn, 12t) and Europe (US$1.8bn, 11t), while Asia slightly increased (US$0.1bn, 0.8t) and other gold ETFs (-US$0.1bn, -1t) experienced mild outflows. COMEX managed money net longs continued to build positions following the April trough.
Positioning revisited
The meaningful gap between COMEX positioning and the gold price, caused largely by tariff fears, is likely to be closed by positioning rising not prices falling, in our view
This is supported by key fundamentals, including: a weaker US dollar and real rate trajectories, alongside elevated market and geopolitical risks
Despite a disconnect between real rates and the gold price, COMEX investors have not disconnected and the relationship is likely to strengthen if yields drop.
Jaws wide open
With recent attention focused firmly on central banks, gold ETFs and Chinese investors, we thought it worthwhile to revisit what the so-called ‘fast money’ positioning on COMEX is telling us. One would think that given where gold prices are, investors would be loaded to the gills. We know this not to be the case as a share of overall portfolios, but it doesn’t appear to be the case in absolute terms either managed money shows net longs, typically representing hedge funds and larger financial institutions (dark blue line). These positions are above average, but it’s still a bit surprising they’re not higher—especially considering where gold prices are right now.
It can probably be pinned on an unwind of the tariff-fear trades in early 2025, and perhaps a bit of profit-taking. The stark sell-off in futures began well before the intraday spot priced peaked at the end of April. Looked at through a z-score lens1—so relative to recent trading ranges—this was a sharp capitulation (light blue dotted line).
Gas left in the tank
COMEX futures investors have recovered some of this lost ground, but this reset leaves us with the view that they have capacity to rebuild positions – a sentiment echoed for ETF investors in our Mid-Year Outlook.
One proviso is that fundamentals support that buying, and we think they do: A structurally weaker US dollar is one key factor and is backed by a strong case and consensus view,2 notwithstanding a possible near-term short squeeze given how crowded the trade is3
Added to that, risk perception remains elevated. Despite the current lull, the markets could be jolted by implied bond volatility or a resurgence of policy and geopolitical tensions (Chart 3)
Lower policy rates should also be a catalyst. But does that also mean lower bond yields, particularly real ones – the bit that’s empirically more important for gold? and if they haven’t mattered on the way up, will they really matter on the way down?
We care a lot
This decoupling of gold prices from inflation-linked bond yields (TIPs) is well documented by now with central banks, emerging market investors and a sprinkling of term premium the likely culprits.
But US futures investors have not decoupled from real yields, they still care. Yes, their sensitivity might be a little lower, likely due to term premia, but it’s still highly significant
Rates are probably already restrictive, so if the front end eases, the long end might follow suit. The weak labour market data in early August is edging us towards this outcome. This could also happen mechanically if lower policy rates stoke longer-term inflation fears, something that swap rates are currently hinting at (Chart 6).
International News
WGC Report-Digital Gold: Unlocking a $700bn Opportunity
Yes—Digital Gold Could Become The Next Major Growth Market For Gold, But Only If The Industry Solves Trust, Access, Utility and Cost.
The World Gold Council (WGC) and Boston Consulting Group estimate that digital gold could unlock up to US$700 billion in latent demand over the long term, although this is a potential-demand estimate rather than a five-year forecast.
What “digital gold” means
The report defines digital gold as two related product categories: vaulted digital gold (digitally represented claims on allocated physical gold) and tokenised gold (blockchain-based tokens backed by physical gold). Together, they currently account for roughly US$45–55 billion, less than 1% of the global gold market, which the WGC values at about US$13 trillion.
Momentum is nonetheless visible. Tokenised gold has grown about fivefold since late 2024 to around US$6 billion, while cumulative spot trading volumes exceeded US$90 billion in Q1 2026—more than during all of 2025.
The $700bn opportunity
The headline figure represents the additional demand that could emerge if the main barriers to adoption were removed at scale. Nearly nine in ten surveyed retail investors said they would consider digital gold under the right conditions, based on a survey of more than 12,000 investors and interviews with 20 industry experts.
The global digital-gold market—currently valued at US $ 45–55 billion—is positioned for significant expansion. In their base-case outlook, the market is projected to grow at an annual rate of approximately 27%, reaching US $ 160–170 billion by 2031. Under a bull-case scenario, market valuation could climb even higher, reaching US $ 270–280 billion over the same period. Furthermore, if key adoption barriers such as regulatory clarity, pricing, and platform trust are fully addressed, the long-term latent demand for digital gold could unlock up to US700 billion.
Genuinely new gold demand by 2031. About US$95 billion, net of displacement
The crucial distinction is that US$700bn is not a market-size prediction for 2031. It is the theoretical upside if trust, distribution, product usefulness and pricing improve sufficiently; the base case is far more conservative.
Four barriers to adoption
Trust is the decisive barrier. Nearly four in five investors prioritise trusting the provider, and they want proof that products are safe, legitimate, transparently backed and redeemable for physical gold; clearer regulation and consumer protection are also central.
Access matters because familiar distribution channels dramatically increase uptake. In markets such as China, India and Indonesia, where digital gold is embedded in super-apps, payment platforms and banking apps, penetration is up to seven times higher than in markets without such channels.
Utility could transform gold from a passive store of value into a usable financial asset. The most attractive new feature is yield generation through lending or collateral use, followed by payments functionality.
Cost remains a prerequisite. Digital gold must be price-competitive with physical bullion and gold ETFs; an uncompetitive price is the second most common barrier cited by investors.
Why it may create new demand
The report argues that digital gold is more likely to expand the gold market than merely shift investors from ETFs, coins or bars. About 65% of latent demand comes from people who do not yet own gold, and 52% of current digital-gold investors held no gold before their first digital purchase.
This makes digital gold a potential on-ramp: among those first-time digital-gold buyers, 92% subsequently bought other forms of gold. Even after allowing for some switching between gold formats, the base case implies around US$95 billion of genuinely new demand by 2031.
Who will drive growth
Younger investors are the immediate growth engine. Awareness reaches 50% among 25–34-year-olds, versus 23% among those aged 55 and older, and younger cohorts are twice as likely to say they would invest if entry barriers were addressed.
This aligns with the broader tokenisation of finance. As blockchain-based investment products become more mainstream, gold’s physical backing may give it a credibility advantage over purely digital assets—provided issuers can demonstrate custody, redemption rights and regulatory compliance.
Could it be the next major gold growth market?
Potentially, yes—but conditionally. The case for digital gold is strong because it combines gold’s established safe-haven and store-of-value role with digital accessibility, fractional ownership, faster transferability and possible new financial uses. The WGC’s own base case implies a market roughly three times its current size by 2031.
However, digital gold will remain a niche if providers cannot deliver:
- Transparent, auditable proof that tokens are fully backed by physical gold.
- Simple, legally robust redemption into physical gold or cash.
- Clear regulation and investor protections.
- Distribution through mainstream banking, payments and investment apps.
- Fees competitive with ETFs and physical bullion.
- Useful features such as collateral, lending or payments—without compromising safety.
Assessment
Digital gold is best viewed as a high-potential distribution and product innovation, not an automatic replacement for physical gold or ETFs. Its biggest contribution may be bringing first-time, younger and digitally native investors into gold, then encouraging them to hold other gold formats as their allocations mature.
If the industry establishes trusted infrastructure and interoperable standards, the US$700bn latent-demand estimate becomes a plausible long-run ceiling. If not, the market may still grow, but likely toward the report’s bear-case trajectory of roughly US$70–80 billion by 2031, driven mainly by wealth growth rather than conversion of untapped demand.
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