Gold ETF Demand Soars on Geopolitical Jitters and Rate Cut Bets

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Rising geopolitical tensions and growing expectations of Federal Reserve interest rate cuts are fueling a renewed rush into gold-backed exchange-traded funds (ETFs), according to fresh data from the World Gold Council (WGC).

In its monthly report published Tuesday, the WGC revealed that global gold ETFs attracted a robust 74.6 tonnes in inflows during June, equivalent to $7.6 billion—fully erasing the outflows seen in May. North American funds led the charge, buoyed by heightened safe-haven demand.

“Investor appetite for gold increased sharply last month as geopolitical risks escalated, particularly amid the Israel-Iran conflict,” the WGC analysts noted. “Although the Federal Reserve left interest rates unchanged in June, its cautious tone on growth and inflation reinforced market bets on eventual monetary easing. Futures markets now price in three rate cuts by the end of 2025, with more to follow in 2026.”

Strongest Half-Year Since 2020

June’s inflows capped off a stellar first half of 2025 for gold ETFs. Globally, gold-backed funds grew by 397.1 tonnes, worth $38.1 billion—their best semi-annual showing since the pandemic-driven surge of early 2020.

North American-listed ETFs dominated the landscape, but Europe and Asia also posted impressive gains. In Europe, funds added 23.1 tonnes worth $2 billion—the region’s first semi-annual increase after a string of losses stretching back to late 2022.

“The UK led European inflows, aided by the Bank of England’s dovish stance despite holding rates steady,” the report noted. “A weaker economy, cooling inflation, and softer labor markets encouraged investors to bet on rate cuts, driving local bond yields lower and making gold more attractive. Meanwhile, the ECB’s eighth rate cut and lingering uncertainty around growth added to demand across major European markets.”

Asia Hits Record Highs

Asian-listed ETFs also staged a remarkable turnaround in June, ending the first half of 2025 with record growth. Funds in the region gained 5.3 tonnes, worth $609 million in June alone, bringing total H1 gains to 104 tonnes or nearly $10.8 billion.

Japan remained a standout, posting inflows for a ninth consecutive month. Investors there added $198 million in June and $1 billion in the first half, as inflation fears mounted amid soaring food prices, particularly rice.

China also contributed, albeit more modestly in June, with $137 million in inflows as trade tensions with the U.S. eased and domestic gold prices stabilized. Nonetheless, China’s H1 performance was unprecedented, with investors adding $8.8 billion—equal to 85 tonnes—on concerns about trade risks, slowing growth, and persistently high gold prices.

Safe Haven Appeal Persists

The WGC concluded that gold’s safe-haven status remains intact, supported by the dual forces of geopolitical instability and a more dovish outlook on monetary policy in key economies.

“As inflationary and trade uncertainties continue to shape the macroeconomic narrative, investors are turning to gold not just as a hedge but as a core portfolio asset,” the analysts said.

With central banks signaling caution and geopolitical flashpoints unresolved, the stage appears set for further gold ETF demand in the months ahead.