Gold is perhaps too expensive for buyers right now, but institutional investors appear to not get enough of it. During the second quarter of 2025, gold-backed ETFs recorded their best inflows in years while bullion prices reached fresh record highs.
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As per the World Gold Council’s most recent Gold Demand Trends report, global ETFs of gold attracted 170 tonnes (187.4 U.S. tons) during the second quarter alone. That takes the first half 2025 total to almost 400 tonnes, its best six-month performance for gold ETFs since the COVID-19 pandemic-spurred boom of 2020.
And in contrast to the over-the-counter retail gold-buying bonanza of the past, this time institutional belief is behind the flows.
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Big Names, Big Inflows
Behind the gold rush in ETFs are old favorites such as:
SPDR Gold Shares (NYSE:GLD): The world’s largest physically backed gold ETF, GLD experienced a spike in demand during this quarter, as it continues to be a favorite for institutional-scale positioning.
iShares Gold Trust (NYSE:IAU): At a lower fee, IAU remains popular with cost-sensitive investors seeking long-term bullion exposure.
Aberdeen Standard Physical Gold Shares ETF (NYSE:SGOL): Provides physical gold held in Swiss vaults, so it’s a favorite among Europeans with increased geopolitical concerns.
GraniteShares Gold Trust (NYSE:BAR): The new kid on the block is winning favor with a narrow spread and minimal fees.
Together, these ETFs have poured billions of dollars into the gold market, even as prices averaged an eye-popping $3,280 per ounce in Q2, an astonishing 40% increase year over year. All the above funds are up around 27% so far this year.
Asia’s Leveraged Appetite
Surprisingly, North America was not alone in joining the stampede for gold. Asian-listed gold ETFs, which manage only a fifth the assets of their North American counterparts, nearly kept pace with them in the second quarter inflows.
Fund flows from Asia-based funds totaled 70 tonnes (77.2 U.S. tons) during the second quarter, which reflects robust regional appetite despite their relatively modest presence. European-listed ETFs also contributed, increasing their holdings by 24 tonnes (26.5 U.S. tons).
This broad-based demand across geographies implies more than a reflex to gold’s price move; it implies growing concern about the macro environment.
What’s Behind The Inflows?
While retail jewelry demand collapsed in the second quarter, reaching levels last seen during the pandemic lockdowns, institutional appetite for gold soared. The reasons are all too familiar:
Rising Geopolitical Tensions – From Middle East conflict to rising China-Taiwan tensions, investors are turning to gold as worldwide risk builds.
Currency Volatility – As the dollar declines and uncertainty over trade policy rises, gold continues to be a hedge against fiat volatility.
Fed Policy Uncertainty – While the U.S. Federal Reserve tightrope walks between inflation and recession risk, long-term prospects for interest rates continue to be unclear, supporting non-yielding instruments such as gold.
Collectively, these drivers have brought together a perfect storm of safe-haven demand that has driven gold ETF inflows to a level not seen in five years.
Equities Catching The Shine Too
The rally in bullion has also spilled over into gold miner ETFs. VanEck Gold Miners ETF (NYSE:GDX) and VanEck Junior Gold Miners ETF (NYSE:GDXJ) have seen revived interest, with investors hoping that higher gold prices will drive mining profits and margins.
These funds, which provide leveraged exposure to gold via equities, have traditionally performed well in gold bull cycles though with greater volatility. Both funds are up more than 50% so far this year.
Can The Gold ETF Rally Continue?
The World Gold Council anticipates further flows into gold ETFs during the second half of the year, but perhaps not at the blistering rates of the first and second quarters. Risks on the horizon include:
- Dollar Strength – A possible bounce in the U.S. dollar could weigh on the price of gold and diminish ETF demand.
- Profit-Taking – Following a 40% rally in prices, some investors might prefer to lock in profit, particularly if volatility returns to equity markets.
Gold may not sparkle for all presently, particularly not for jewelry consumers priced out, but it is a good choice for ETF investors looking for solidity in a turbulent world.
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