Global physically backed gold exchange-traded funds (ETFs) saw a net inflow of $6.6 billion in April, reversing the outflows recorded in March, according to the World Gold Council. Total assets under management for these funds rose to $615 billion, with holdings reaching 4,137 tonnes. The rebound was broad-based, with Europe attracting $3.7 billion, Asia $1.8 billion, and North America $1.0 billion in new money.
Spot gold extended its winning streak to three sessions on Thursday, trading at $4,740.42 per ounce, buoyed by optimism over a potential U.S.-Iran peace agreement and a weaker U.S. dollar. U.S. gold futures rose 1.2% to $4,749.20. The SPDR Gold Shares (GLD), the largest U.S. gold ETF, was last quoted at $436.79, with assets under management of $156.3 billion as of May 6, according to State Street.
The renewed inflows come amid a shifting narrative around gold's role. While traditionally viewed as an inflation hedge, the current rally is being driven by a combination of factors: softer oil prices, a weaker dollar, and geopolitical tensions. However, some analysts question the sustainability of demand for a non-yielding asset, especially as inflation pressures ease.
Bullish calls have been aggressive. Seeking Alpha analyst Zoltan Ban recently reiterated a buy rating on GLD, floating a $12,000-per-ounce target by the end of the decade, citing central bank accumulation, fiscal deficits, and the Iran crisis. In the near term, Bob Haberkorn of RJO Futures sees gold making a run at $5,000 per ounce if a ceasefire holds and the Strait of Hormuz reopens. TD Securities has set a $5,200 target once conflict eases.
Yet, caution is growing. Rob Isbitts, a Barchart columnist, warned investors to "check your math" if relying on gold ETFs as a pure inflation hedge, arguing GLD's real value lies in diversification. He noted the ETF's rapid rise from roughly $300 to $500 over five months, followed by a pullback toward $400, and pointed to a soft patch in the percentage price oscillator—a technical momentum indicator.
The debate has shifted from price direction to positioning and crowding risk. With gold's two-year rally losing momentum, analysts are increasingly focused on who is already positioned in the trade. The World Gold Council data suggests demand remains steady, but the question lingers: is GLD still a bargain hedge against turmoil, or has it become a crowded momentum play?
Competition in the gold ETF space is intensifying. BlackRock's iShares Gold Trust (IAU) charges a 0.25% sponsor fee and holds $72.9 billion in net assets. State Street's SPDR Gold MiniShares Trust (GLDM) offers a cheaper 0.10% gross expense ratio, with $31.7 billion in assets. abrdn's Physical Gold Shares ETF (SGOL) has a 0.17% net expense ratio.
Investors are now eyeing the May 8 U.S. employment report for clues on the Federal Reserve's interest rate path. Meanwhile, the People's Bank of China extended its gold buying streak to 18 consecutive months in April, underscoring sustained official-sector demand. The macro picture remains fluid, with the Iran nuclear proposal still under review and oil markets sensitive to any Strait of Hormuz disruption. "Not completely out of the woods," said Peter Grant of Zaner Metals, who expects continued market reaction to Middle East news.
