The latest data from the World Gold Council (WGC) shows the growing weakness of European assets.
For most of the year, the low performance of gold was caused by the outflow of funds from North American-based exchange-traded funds (ETF) backed by gold.
In a report released on Thursday, the WGC said that gold-backed ETFs saw an outflow of 15.2 tons last month. The current total stocks are 3,592 tons, which is the lowest level since April.
The outflow of ETF funds last month contributed to a 4% decline in gold prices. The market continues to struggle for sustained bullish momentum as prices hold support above $1,750 per ounce. December gold futures were trading at $1,754.80 per ounce, losing 0.17% for the day.
The report says that European funds carried out an outflow from 11.5 tons of gold. At the same time, there was an outflow of 6.6 tons in the North American market. Analysts noted that the change in monetary policy encourages investors to leave the gold market.
According to many analysts, the reason for the outflow of gold is associated with the announcement of the central banks to tighten policy in the future.
The WGC noted that real bond yields are starting to rise in anticipation of tightening monetary policy, and this is not very good for gold investors.
This Council reported that the inflow of investments was in Asia during the previous month. Asian ETFs announced an influx of 2.4 tons. Analysts believe that the precious metal benefited from growing uncertainty since the Evergrande liquidity crisis shocked stock markets.
The WGC also noted that assets in Indian ETFs have grown to their highest levels since 2013.
Adam Perlaky, WGC's managing director and head of ETF research, said that low-cost ETFs continue to attract investors. At the moment, this sector accounts for about 6% of the global market. And despite the rise in bond yields, gold still plays an important role in the portfolio, especially in conditions of increasing market volatility. The need to protect the portfolio and diversify it is security, especially when investors are trying to defeat potential stagflation. If the economic recovery slows down and inflation remains high, gold will be very valuable in the portfolio.