Gold ETFs have seen an unprecedented surge in investment over the past eight weeks, with global funds adding a staggering 268 tonnes of gold worth $33 billion. This represents more than 60% of typical quarterly total demand from investors and central banks combined across various buying channels, including ETFs, futures, bar & coin purchases, and official sector buying during 1Q24-2Q25.

According to JPMorgan, the latest influx of gold into ETFs is a stark departure from historical trends, which typically see a more gradual increase in gold holdings over time. The sudden and significant growth in gold ETFs suggests that investors are becoming increasingly concerned about the potential for inflation and economic instability, leading them to seek safe-haven assets like gold.

The surge in gold ETFs is not limited to any one region, with funds from both US and European markets contributing significantly to the total tonnage added. This widespread interest in gold is a testament to the growing global appetite for safe-haven assets, which are seen as a hedge against economic uncertainty and potential market volatility.

The reasons behind this renewed interest in gold are multifaceted, but can be broadly attributed to several factors. Firstly, the ongoing COVID-19 pandemic has led to increased economic instability and central banks’ efforts to stimulate their respective economies through unconventional monetary policies, such as quantitative easing. These measures have resulted in a significant increase in money supply and inflation, which have in turn fueled concerns about the purchasing power of major currencies.

Secondly, political tensions and geopolitical risks continue to be a source of uncertainty for investors, with ongoing conflicts and unstable governments contributing to an environment of heightened risk aversion. The ongoing conflict in Ukraine, the Middle East, and other regions has led to increased demand for safe-haven assets like gold, which are seen as a hedge against potential losses due to geopolitical risks.

Lastly, the recent collapse of several high-profile cryptocurrencies has highlighted the vulnerability of digital assets in times of market volatility. As investors become increasingly wary of the risks associated with digital currencies, they are turning to traditional safe-haven assets like gold as a more stable store of value.

The unprecedented surge in gold ETFs is a clear indication of investor sentiment towards safe-haven assets. As economic uncertainty and geopolitical risks continue to plague global markets, investors are increasingly looking to gold as a hedge against potential losses. The recent collapse of digital currencies has further underscored the importance of traditional safe-haven assets like gold in times of market volatility.