Investors are increasingly turning to gold Exchange-Traded Funds (ETFs) as a safe haven amidst the political and economic uncertainties triggered by the new U.S. administration, driving the commodity to record levels. Since the U.S. President's inauguration, his bold policy changes and unconventional diplomatic moves have propelled gold prices to successive highs.
Initially dominated by European investors, the surge in gold ETFs now attracts interest from U.S. investors who traditionally favored equities. Gold prices hit a new peak at $3,004.86 an ounce, marking a 14% gain since the beginning of 2025, following a 27% increase in 2024.
European ETFs have seen a rise of 46.7 metric tons, totaling 1,334.3 tons since 2025, contrasting the outflows experienced between 2021-2024, according to the World Gold Council. This inflow indicates a potential support in an overbought market atmosphere.
"Investors, especially those in the West, fled gold as the Fed began raising rates in 2022. However, with uncertainties in other markets and the potential for lower funding rates, they are returning," explained Ole Hansen, Head of Commodity Strategy at Saxo Bank.
Recent stock market turbulence has led U.S. retail investors to turn to gold as a safe haven, increasing demand for gold ETFs. Alexander Zumpfe, a precious metals trader at Heraeus Metals, notes that despite U.S. market confidence, interest in gold as a hedge is growing.
Gold holdings in U.S. ETFs have surged by 68.1 tons to 1,649.8 tons this year. Hansen suggests that Trump's policies are causing investors to move away from U.S. stocks towards gold in the short term.
Apart from the ETF trend, retail investors globally are showing a growing appetite for gold. Adrian Ash, head of research at BullionVault, reports a significant increase in first-time gold buyers, pointing to a rise in demand for physical gold bars and coins in Europe and North America.
To sustain its high price level, experts suggest that further increases in retail demand for gold bars and coins, paired with heightened central bank buying, will be necessary.