Data released by the World Gold Council on Tuesday revealed that physically-backed gold exchange-traded funds (ETFs) recorded their largest quarterly inflow in three years during the period from January to March 2025.
Investors turned to gold ETFs in the first quarter of the year in search of a safe haven amidst growing concerns about economic recession and political pressures. The primary reason for this trend was the escalation of the global trade war, ignited by U.S. President Donald Trump after announcing widespread tariffs on most American imports. This announcement cast a shadow over the global economy, raising significant concerns in financial markets and prompting investors to seek ways to hedge against these risks.
Specifically, gold ETFs saw an inflow of 226.5 metric tons, with a total value of $21.1 billion in the first quarter of 2025. This represents the largest inflow since the first quarter of 2022, which also experienced substantial inflows due to the repercussions of Russia's invasion of Ukraine. This significant inflow increased the total holdings of these funds by 3%, bringing the total holdings to 3,445.3 tons by the end of March 2025, marking the highest level since May 2023. Additionally, gold holdings in ETFs rose by 10% compared to 2024.
In terms of geographical distribution, U.S.-listed funds topped the list of incoming flows, attracting about 133.8 tons of gold in the first quarter, while European-listed funds attracted 54.8 tons.
The start of 2025 has been strong for gold ETFs, contrasting with the modest inflows experienced in 2024, following three years of outflows due to rising interest rates. This indicates a shift in investor sentiment, with greater attachment to gold as a primary hedging tool in the face of global economic and political instability.
