Inflows push gold ETFs to new highs as safe-haven demand builds

Risks channel August inflows West

• Global gold ETFs saw their third consecutive month of inflows in August, once again led by Western funds
• Their AUM rose to another month- end peak and collective holdings continued to rebound, although ended the month 6% shy of the record high
• Gold market trading volumes remained broadly unchanged, averaging US$290bn per day

Similar to July, North American and European funds led global inflows while Asia and other regions saw mild outflows (Table 1). Nevertheless, the y-t-d inflow of US$47bn reached the second strongest on record after the peak of 2020.

Regional overview

North American funds added US$4.1bn in August, the region’s third consecutive monthly inflow.

• Persistent trade risk and broader market uncertainty
• The consensus short dollar trade, which reduces the opportunity cost of holding gold
• Lower rate expectations as the market digested Powell’s Jackson Hole comments as dovish.

It is also notable that low-cost gold backed ETFs, often viewed as a proxy for long-term strategic positioning, are having their best year on record (Chart 2). We consider this to be a signal that – beyond short-term market noise – investors are steadily building safe-haven allocations in response to a backdrop of elevated risks.

European funds have now experienced inflows four months in a row, adding US$1.9bn in August. The UK, Switzerland, and Germany led the charge. During the month, the US imposed a surprise 39% tariff on Switzerland, the highest on any developed nation.[3] 

This sudden and unexpected hit has affected the country’s economic prospects, pushed up safe-haven needs among local investors and increased demand for gold. German inflows may have also been supported by higher safe-haven demand as the country’s Q2 GDP growth was revised down further, sparking investor fears of recession.[4] 

 Meanwhile, with the euro and Swiss franc strengthening against the dollar, holdings in FX-hedged products also rose. The UK also witnessed strong inflows in the month, likely buoyed by stagflation concerns – the country’s inflation rebounded while the US tariffs and a tax hike on employers – which could also push up prices further – cloud growth.

In contrast, India saw its fourth consecutive monthly inflow in August, supported by elevated safe-haven needs amid weak equities as well as ongoing global trade and geopolitical risks. But they were insufficient to offset Chinese outflows. 

Flows in other regions remained mildly negative, shedding US$50mn. Australian inflows were insufficient to offset South African outflows in the month.

Volumes remain stable

Gold market trading volumes remained broadly unchanged, averaging US$290bn per day – just 2% lower m/m.[5] The minor decline was led by a 17% m/m drop in exchange-traded volumes – trading at both COMEX and Shanghai Futures Exchange cooled. 

Despite this, the average volume of US$114bn/day has remained above its 2024 level of US$102bn/day. Gold ETF trading volumes were also down across all regions, decreasing 9% m/m to US$4.5bn/day. But OTC trading activities rose, reaching US$171bn/day on average in the month, 12% higher than July and well above the 2024 average of US$128bn/day.