Investment funds across the globe have dramatically increased their holdings in gold, acquiring over 100 tonnes since the beginning of the year. This surge has pushed the total assets of gold-focused exchange-traded funds (ETFs) to 2,760 tonnes, the highest level since December 2023. According to Kommersant, this growing appetite for the precious metal reflects a broader shift among institutional and retail investors seeking refuge from rising geopolitical and macroeconomic instability.
Flight to Safety in an Uncertain World
The trend is most evident among institutional investors who are reallocating portfolios in response to policy directions taken by the U.S. administration. The underlying driver remains the same—investor aversion to risk amid growing instability.
Data from Bloomberg shows that by early March, gold-focused ETFs reached 2,760 tonnes, with 81.5 tonnes added since February alone. This marks a robust growth trajectory sustained since the beginning of 2025. The pace of accumulation is comparable only to spring 2022, when similar geopolitical tensions triggered an inflow of over 200 tonnes.
Interest in gold is also reflected in capital flows. According to Emerging Portfolio Fund Research (EPFR) data cited by Bank of America (BofA), gold funds have attracted $13.7 billion globally since the start of the year. Nearly $10 billion of this was recorded over the four weeks ending March 12—setting a historical record for such a short interval.
North America Leads the Charge
North American investors have been the most active participants in the gold rally. In February alone, regional funds attracted $6.7 billion, with $5.6 billion flowing into just two U.S.-based ETFs—SPDR Gold Shares and iShares Gold Trust—according to the World Gold Council. This is the strongest monthly inflow since July 2020.
Portfolio managers attribute this renewed interest to expectations of tax breaks in the U.S., designed to support domestic businesses. However, these incentives are accompanied by a ballooning fiscal deficit, which currently exceeds $2.2 trillion and is expected to grow. Markets are already pricing in a deeper budget gap, weighing down the U.S. dollar, which has lost 4% against major global currencies.
Faced with declining real interest rates—10-year U.S. Treasury bonds yield 4.3% amid 3.8% inflation—investors are increasingly hedging currency risks through gold and long-duration bonds. As one portfolio manager from Astero Falcon noted, this is a classic setup for gold demand.
Political Risk and De-Dollarization Fuel the Trend
One of the strongest catalysts behind this gold-buying spree is the geopolitical stance of the new U.S. administration. Tariffs on imports from Canada, Mexico, China, and Europe introduced in early 2025 have raised global concerns. As was the case three years ago, this protectionist agenda has prompted investors to move toward safe-haven assets.
Moreover, declining trust in political institutions is contributing to the flight to gold. BofA reports that in 2024, 27 out of 33 countries holding elections saw leadership changes. Particularly acute instability has been noted in Europe, where major political parties in the UK, Germany, and France secured their lowest share of the vote in nearly a century. Analysts suggest markets are pricing in a scenario of escalating political fragmentation, further driving capital into risk-averse assets.
Russian Investors Seek Stability Amid Limited Options
In Russia, demand for gold is also on the rise. Data from Investfunds indicates that in February, retail funds investing in gold raised 3 billion rubles—38% more than in January. Since the beginning of 2025, these investments have exceeded 5 billion rubles, with total fund assets reaching 47 billion rubles.
Analysts attribute this surge to the diminishing availability of foreign-currency instruments for savings since 2022. Buying foreign securities has become more difficult, with increased infrastructure risk, minimal returns on remaining foreign deposits, and limited liquidity for domestic quasi-currency bonds. Gold offers a more attractive alternative, especially as payouts on many ruble-denominated bonds have declined.
Portfolio managers note that gold fund shares remain the most cost-effective and convenient way for Russian investors to access the precious metal without dealing with physical storage or tax reporting complexities.
Rising Prices, But Limited Upside
While inflows into gold have pushed prices higher, the impact has been moderate. According to Investing.com, on March 14 the gold price surpassed $3,000 per troy ounce for the first time in history, peaking at $3,005. This represents a 14.5% increase since the beginning of the year.
Experts believe future price dynamics will depend on several variables, including geopolitical developments, inflation expectations, trade tensions, and U.S. Federal Reserve rate decisions. For now, market consensus leans toward sustained demand—particularly from central banks.
Outlook: Central Banks Remain Key Players
According to analysts, central banks are expected to remain net gold buyers even if real interest rates rise. Ivan Avseyko, a senior analyst at the investment firm “Pervaya,” foresees continued demand in the short term, though he doesn’t rule out some market corrections.
His long-term outlook suggests global central banks may double their average annual purchases to 40–50 tonnes during 2025–2026 compared to 2022 levels. This would support the continued accumulation of gold reserves, especially in developing countries pursuing de-dollarization and economic sovereignty.
In summary, the current “gold rush” is fueled not merely by market speculation but by deep-rooted structural shifts in the global political and economic landscape. With geopolitical tensions and fiscal uncertainty on the rise, gold is once again reasserting its role as the world’s ultimate safe-haven asset.
