Agio Gold Sector Fund Ltd. Fact Sheet - September 2026

A Sharp Pullback, and a Telling Divergence

Gold finished September at US$4,176 per ounce, down 8.5% for the month, with similar declines across the major currencies. The World Gold Council's return attribution model points to two main culprits: a surge in US Treasury yields and a stronger US dollar, compounded by heavy selling in the futures market. Yet beneath that headline, September's flows told two very different stories, and which one wins matters for the months ahead.

The Big Picture

Despite the price fall, global gold ETFs recorded US$10 billion, 67 tonnes, of inflows in September, with North America leading and Europe and Asia following. The selling came from COMEX futures instead. In plain terms, fast-moving futures money left while longer-term allocators kept buying. The Council titled its September commentary 'Go with the flow' for exactly this divergence, and earlier editions of this fact sheet made the same point: the stickier money says more about where underlying demand is heading.

Key Market Drivers

Yields and the Dollar Set the Tone: The US 10-year Treasury yield climbed 53 basis points to 5.3% and the dollar index rose 2%, and the Council's attribution model assigns most of September's gold decline to those two forces. Higher yields raise the cost of holding an asset that pays no income, and a stronger dollar makes gold dearer for buyers everywhere else. Why long yields keep rising, stronger growth, heavier government borrowing or doubts about inflation control, is the debate that will decide whether this stays a headwind.

Futures Sold, ETFs Bought: Net managed money positions on COMEX fell by US$12 billion, 84 tonnes, and spreading positions by US$22 billion, 156 tonnes. That liquidation likely did much of the damage to the price. Futures positions turn over quickly; ETF holdings tend to stay. When the sellers are fast money and the buyers are allocators, a weak month says less about demand than the headline suggests.

Europe's Fiscal Signal: UK gold ETFs attracted 54 tonnes in the third quarter, with inflows in 12 of the 13 weeks to late September, helping Europe to its first positive-flow quarter since 2021. The Council's models would have predicted only around 18 tonnes, and since July the excess has moved in step with the UK term premium. The reading: investors concerned about fiscal strain and inflation credibility are reaching for gold, a pattern that looks more durable than the short-lived UK surge of 2022.

Positioning: Patience, Then Conviction

Our Investment Advisor reads September's pullback in that context. Gold's real price, its value measured against the broad cost of goods and commodities, remains consistent with a long-term strategic advance, while the quoted price builds a short-term base. Gold equities have historically offered greater reward than the metal at this stage of a cycle, with larger swings in both directions. The Fund's advisors expect to add to the Fund's gold equity positions around the middle of October, subject to the model confirming the move. Until then, patience is the position.

Looking Ahead

October's centre of gravity is the Federal Reserve meeting. Recent US data no longer support the case for an imminent rate hike, and markets have lowered tightening expectations for the Fed, the Bank of England and the ECB alike. The test the Council sets out: if bond yields stay elevated despite that mildly dovish repricing, investors are focused less on near-term policy rates and more on deeper fiscal and term-premium risks, conditions that could continue to support gold demand. Whether gold completes the base it is building remains the signal our advisors are watching. As always, timing is never guaranteed.