Gold Exchange-Traded Funds (ETFs) have emerged as a cornerstone for investors seeking exposure to gold without the complexities of physical ownership. In 2025, gold ETFs have recorded their largest semi-annual inflow since the first half of 2020, with $38 billion in net inflows and collective holdings rising by 397.1 metric tons to 3,615.9 tons by June’s end, according to the World Gold Council. This surge, driven by U.S. tariff policies and geopolitical tensions, has pushed global gold ETF assets under management (AUM) to a record $383 billion, highlighting their role as a safe-haven asset during volatile times.
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Why Gold ETFs Are Gaining Traction
Gold ETFs, such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), track the price of physical gold bullion, offering liquidity and transparency without the storage or purity concerns of physical gold. In 2025, escalating trade wars, sparked by U.S. tariffs on over 60 countries, have fueled investor demand for safe-haven assets.
The SPDR Gold Shares ETF, with over $100 billion in AUM, and iShares Gold Trust, with a low 0.25% expense ratio, have seen significant inflows as investors hedge against inflation and economic slowdown. North America led with $21 billion in H1 inflows, while Asia contributed 28% to global flows despite holding only 9% of AUM, reflecting robust regional demand.
Gold ETF: Performance and Market Dynamics
Gold ETFs have benefited from a 26% year-to-date rise in spot gold prices, which hit a record $3,500 per ounce in April 2025. Global ETF trading volumes surged 120% month-on-month in April, driven by activity on COMEX and the Shanghai Futures Exchange. However, tracking errors and expense ratios, such as GLD’s 0.4% versus IAU’s 0.25%, can impact returns.
Investors are also navigating liquidity challenges, with SPDR Gold Shares offering the tightest bid-ask spread at 0.007%, making it ideal for frequent traders. Despite strong inflows, late-month profit-taking in Europe and a cooling equity market have tempered momentum, with European ETFs seeing modest $807 million outflows in April.
Gold ETF : Risks and Considerations for Investors
While gold ETFs eliminate storage costs, they face risks like price volatility and tracking discrepancies. Unlike gold mining ETFs, which may diverge due to operational risks, physical gold ETFs closely mirror spot prices but offer no income, unlike stocks or bonds.
Taxation is another factor: in the U.S., physical gold ETFs like GLD are taxed as collectibles at a 28% long-term capital gains rate. Investors should prioritize low-cost, high-liquidity ETFs like iShares Gold Trust Micro (IAUM) and consider portfolio allocation to avoid overexposure.
The ongoing U.S.-China trade tensions and potential Federal Reserve rate cuts in late 2025 could further bolster ETF demand.
Gold ETF : Strategic Investment Outlook
Gold ETFs remain a compelling choice for diversification in 2025, particularly as stagflation fears grow. The World Gold Council notes that global ETF holdings are at their highest since August 2022, supported by central bank buying and investor caution.
For those seeking stability, ETFs like OUNZ, which allow share-to-physical gold conversion, offer flexibility. Investors should monitor macroeconomic indicators, such as U.S. inflation data and trade policy developments, to time entries and exits effectively. With gold’s resilience amid global uncertainties, gold ETFs are poised to remain a vital portfolio hedge.
