Gold’s historic rally, fuelled by ETF inflows and global risks, is transforming investment strategies
Gold has shattered records, surging past US$4,000 per ounce and posting its largest annual gain since 1979—a move that is reshaping portfolio strategies and prompting a fresh look at the metal’s role as both a hedge and a growth asset, according to LSEG data and multiple market analysts cited by Reuters.
As reported by Reuters, this rally is being fuelled by unprecedented inflows into gold exchange-traded funds (ETFs), with global assets in gold ETFs now accounting for 2.6 percent of holdings, up from 1.9 percent a year ago.
US ETFs such as SPDR Gold Shares have seen inflows set all-time records of US$35bn as of September, outpacing the previous full-year record of US$29bn set in 2020.
Globally, gold ETF inflows have reached US$64bn year-to-date, with a record US$17.3bn in September alone.
Analysts cited by Reuters and Bloomberg point to a “barbelling” effect, where gold is being used to hedge against potential setbacks in the AI-driven equity boom, as well as ongoing economic and geopolitical uncertainty.
The metal’s appeal is further underpinned by expectations of US Federal Reserve rate cuts, persistent inflation concerns, and heightened geopolitical risks, including ongoing conflicts in Ukraine and the Middle East, and political turmoil in France and Japan..
According to the World Gold Council, this surge in demand marks a dramatic reversal from the previous four years, during which gold ETFs experienced outflows totalling US$23bn.
Consultancy Metals Focus expects central banks to purchase 1,000 metric tons of gold in 2025, marking the fourth consecutive year of significant buying, Reuters reported.
Canadian markets have not been immune to these shifts.
As reported by Bloomberg, Canada posted its second-largest trade deficit on record in August, driven in part by an 11.8 percent drop in gold exports and a surge in imports of the metal.
The country’s goods trade surplus with the US narrowed, and total exports fell 3 percent—the first decline in four months.
Market strategists quoted by Reuters warn that while gold’s climb has been steep, volatility remains a feature of the trade.
Some, such as those at Goldman Sachs, expect gold ETF holdings in North America and Europe to rise further as the Fed continues to cut rates into 2026.
Projections for gold prices topping US$5,000 an ounce by 2026 are now part of mainstream forecasts.
As the rally continues, advisors are watching a market where gold is no longer just a defensive play.
As Tim Waterer of KCM Trade told Al Jazeera, gold is “an asset for all occasions,” rising during both risk aversion and risk appetite, and acting as a persistent uncertainty hedge.
The current environment, with its mix of policy shifts, global tensions, and evolving investor behaviour, is redefining the metal’s place in diversified portfolios.
