(Kitco News) – Gold ETFs are continuing to see strong investment inflows as prices appreciate amid trade tariff fears, while silver investment is still underperforming even though the gray metal’s price actually outperformed gold in Q1, according to precious metals analysts at Heraeus.
In their latest precious metals update, the analysts noted that China’s central bank is slowing its gold purchases.
“The People’s Bank of China reported it had added 16 koz of gold to its reserves in February,” they wrote. “It was the fourth straight month of additions to gold reserves since purchasing was resumed in November last year. Prior to this, the PBoC added more than 1 moz of gold to its reserves between November 2022 and March 2024. During that period, the average volume of monthly gold purchases was 59 koz, though the size of monthly purchases fell as the gold price rose. Now, with the gold price above $3,000/oz, the scale of purchasing is significantly reduced, averaging 20 koz/month since November 2024.”
“The reduction is not necessarily related to the current price level,” they added. “However, central bank demand has been supporting demand for gold over the last 24 months, and a reduction could see some of that support removed.”
Institutional investors, on the other hand, are increasing their allocations amid the gold price rally. “Gold ETF inflows have been very strong over the last month,” the analysts said. “ETFs added ~23 tonnes of gold on 21 March, the biggest one-day increase since 2022. Over the first quarter of 2025, gold-backed ETFs have seen net inflows of around 152 tonnes so far, lifting the total to the highest since September 2023.”
But global gold ETF holdings in physical terms are still well off the all-time high set in November 2020 when gold was trading below $1,900 per ounce. “While lower in terms of physical allocation, the estimated assets under management (AUM) of global gold-backed funds are currently at all-time highs,” they wrote. “As of last Friday, the value of total global holdings was equal to $268 billion.
“Continued inflows into gold-backed ETFs could continue to support the gold price and, though it is above $3,000/oz, investors may be on the look-out for profit-taking opportunities to cash out gains made over the last 18 months,” they added. “Trump’s tariff tirade continued last week as 25% tariffs on automotive imports were officially announced. The uncertainty stoked by this move helped to push spot gold to another all-time high of $3,087/oz late last week.”
Gold prices are continuing their standout performance from last week, rocketing through $3,100 per ounce shortly before 10 pm EDT on Sunday evening, and hitting a new all-time high of $3,128.13 earlier on Monday morning.
Spot gold last traded at $3,108.22 per ounce for a gain of 0.74% on the session.
Turning to silver, Heraeus analysts noted that the gray metal actually edged out gold to become the top performer in the first quarter.
“The silver price has risen by 17.9% year-to-date (as of Friday’s close) – an even higher return than gold despite its record-breaking rally, which is 17.5% higher than on New Year's Day,” they said. “The first quarter tends to be seasonally strong for the silver price, and often precedes a weaker Q2 – based on the last decade of data.”
But despite silver prices outgaining gold, investors have shown less interest. “Silver ETF holdings have increased by just 0.32% (2.2 moz) since the start of the year, compared to a 5.9% increase in total ETF gold holdings over the same period,” they wrote. “Despite seasonal headwinds, scope for investors to buy into silver’s strong performance remains high, and could support the price further in the next few months. Last week alone, silver rose by 3%, getting within touching distance of the 13-year high of $34.87 set in October 2024, but the $34-35/oz area of resistance appears to be holding firm in the short-term.”
Silver saw another sharp selloff on Monday morning, falling from above $34.100 per ounce at 9:00 am EST in the spot market to a session low $33.507 15 minutes after the North American open, but prices are recovering.
At the time of writing, spot silver last traded at $33.735 per ounce and is down 1.16% on the daily chart.
