(Kitco News) - Geopolitical uncertainty and expectations that the Federal Reserve will eventually lower interest rates this year continue to support investment demand in gold-backed exchange-traded funds (ETFs), according to the latest data from the World Gold Council (WGC).
In its monthly ETF report released Tuesday, the WGC said global gold-backed ETFs saw inflows of 74.6 tonnes, valued at $7.603 billion, completely reversing May’s outflows. The rise in gold demand was primarily driven by North American funds.
“Spiking geopolitical risks amid the Israel-Iran conflict boosted investor demand for safe-haven assets and supported inflows into North American gold ETFs. Although it held rates steady in June, the U.S. Fed continued to express concerns about slowing growth and rising inflation. Markets are now pricing in three rate cuts by the end of 2025 and an additional two in 2026,” the analysts said in the report.
June’s robust growth reflected the broader trend seen in the first half of the year. The WGC noted that, in the first six months of 2025, ETF holdings increased by 397.1 tonnes, valued at $38.082 billion—marking the strongest semi-annual performance since H1 2020.
While North American-listed funds dominated the marketplace, the report highlighted broad-based gains elsewhere, with European markets turning positive after uninterrupted semi-annual losses since H2 2022.
European ETFs saw their gold holdings increase by 23.1 tonnes, valued at $2 billion.
“The UK led inflows during the month. Although the Bank of England kept rates unchanged at its June meeting, the stance was generally dovish. Combined with weaker growth, easing inflation, and a cooling labour market, investors raised their bets on future rate cuts. This resulted in declining local yields and increased gold’s allure,” the analysts said. “Meanwhile, the eighth cut from the European Central Bank, uncertainties surrounding growth, and rising geopolitical risks contributed to gold ETF demand in several major markets.”
The report also noted that Asian demand reversed its May outflows, ending the first half of the year with record growth.
Asian-listed ETFs reported inflows of 5.3 tonnes, valued at $609 million. Over the last six months, Asian gold holdings increased by 104 tonnes, valued at $10.774 billion.
“Japan recorded inflows for the ninth consecutive month ($198 million in June; $1 billion in H1), possibly driven by elevated inflationary concerns—particularly due to a surge in rice prices,” the analysts said. “China saw only mild inflows in the month ($137 million) as trade tensions eased and local gold prices moderated. Nonetheless, China’s H1 inflows of $8.8 billion (85 tonnes) were unprecedented amid spiking trade risks with the U.S., growth concerns, and the surging gold price.”
