By Neils Christensen – 4-10-2025
Growing fears that the U.S. economy will see lower growth and higher inflation have finally pushed investors off the sidelines and into gold in a meaningful way, according to the latest research from the World Gold Council.
While the gold market has seen solid inflows into gold-backed exchange-traded funds since the start of the year, the March flow data from the WGC showed a broad-based increase in all major regions.
According to the report, North American-listed funds represented 61% of total inflows, while European markets accounted for about 22% of demand and Asian markets represented 16% of global inflows.
European demand has been the missing piece, underperforming within the gold market for the last few months compared to other regions. However, the WGC noted that these funds are starting to catch up.
“First quarter flows in Europe of US$4.6bn stood out as the strongest quarter since Q1 2020,” the analysts said in the report.
In total, 92 tonnes of gold, valued at $8.6 billion, flowed into global ETFs last month. Meanwhile, 226 tonnes of gold, valued at $21 billion, flowed into ETFs in the first quarter, marking the second highest quarterly level in dollar terms, only behind the second quarter of 2020.
In a regional breakdown, North American ETFs saw their gold holdings increase by 67.4 tonnes last month. The analysts said that demand continues to be driven by the usual factors, including solid momentum coupled with economic chaos and geopolitical uncertainty.
“Additionally, equity pullbacks, due to growth concerns and market liquidity worries amid ongoing quantitative tightening, further pushed up investor demand for safe-haven assets,” the analysts said.
Meanwhile, European-listed funds saw inflows of 13.7 tonnes. The report said the UK, Switzerland, and Germany all saw an increase in gold holdings.
“Although the Bank of England made no changes to its benchmark rate during its March meeting, a cloudy growth outlook further weighed by US tariff concerns, weak stock market performance, and the gold price surge drove demand higher in the UK,” the analysts said. “Equally, despite a jump in the 10-year German Bund yield in early March amid Germany’s massive spending plan, investors in Europe continue to add gold ETFs to their portfolios as the ECB’s March cut encouraged further easing expectations and US tariff risks loom over the growth outlook.”
Finally, Asia-based funds saw inflows of 9.5 tonnes last month.
“China and Japan dominated demand in March, both likely driven by rocketing gold price performances, which dwarfed other assets in the month, and roaring global trade policy risks,” the analysts said.
Although there is a risk that gold’s rally becomes unsustainable, the WGC said the market is backed by solid momentum.
“The extent and speed of gold’s rally have drawn out comparisons to previous peaks. While there are headwinds that the gold market will naturally face in this environment, our analysis also suggests that current macroeconomic conditions are quite different from prior periods when the gold market reached previous highs,” the analysts said in the report.
“The willingness to hold and reluctance to sell – given current extreme policy uncertainty – could generate real momentum,” they added. “By historical standards, the current rally isn’t particularly large or long. And comparing the current rally to the recent 2011 and 2020 peaks highlights that, relatively speaking, fundamentals look more solid.”