Gold holds below $4,700 but ETF inflows signal strong investor appetite

• Global gold ETFs added 45 tonnes in April after heavy March outflows.
• European funds led inflows amid inflation and geopolitical concerns.
• Analysts say gold remains vulnerable short term but bullish long term.

Gold prices remained subdued at the start of the new trading week, hovering below $4,700 an ounce.

However, analysts continue to expect renewed strength later this year as investment demand for bullion remains resilient.

According to the latest monthly report from the World Gold Council, global gold-backed exchange-traded funds recorded inflows of 45 tonnes in April, valued at approximately $6.575 billion.

The rebound followed heavy outflows of 84.3 tonnes in March and pushed total global ETF holdings up to 4,137 tonnes — the third-highest level on record and only slightly below the all-time high of 4,176 tonnes reached in February.

Europe leads gold buying

European-listed gold ETFs accounted for the largest share of inflows during April.

Investors in the region added nearly 27 tonnes of gold, valued at around $3.7 billion.

The World Gold Council said the United Kingdom led the surge in demand, while Switzerland and Germany also recorded meaningful inflows.

Analysts said the buying activity reflected growing concerns over geopolitical instability and inflation risks stemming from the ongoing Middle East conflict.

“The UK led the surge, while Switzerland and Germany also contributed meaningfully. Positive flows in the region appeared linked to heightened geopolitical and geoeconomic risks, as investors assessed the inflationary implications of a more protracted Iran conflict and the associated pressure on energy prices,” the report said.

North American investors also continued adding exposure to bullion-backed products, with regional funds seeing inflows of 6.1 tonnes valued at roughly $1 billion.

Inflation risks create short-term pressure

Despite the recovery in ETF demand, analysts warned that gold remains vulnerable in the near term due to shifting interest-rate expectations and ongoing energy market disruptions tied to the Iran war.

The conflict has triggered a major shock across global energy markets, driving oil prices sharply higher and reviving inflation concerns globally.

Higher inflation risks could force central banks to maintain tighter monetary policy for longer, raising bond yields and increasing the opportunity cost of holding non-yielding assets such as gold.

The World Gold Council said markets currently appear to be treating the energy shock as temporary, limiting immediate upside momentum for bullion prices.

“The near-term setup is not especially friendly. Gold is technically vulnerable, rate-cut expectations have moved out, and markets are treating the shock as temporary. Absent a fresh catalyst, this could remain a weak period for gold,” analysts said.

Asian demand remains strong

While Western demand remains sensitive to interest-rate expectations, Asian investors continued to aggressively accumulate gold exposure.

Asian-listed gold ETFs recorded inflows of more than 11 tonnes in April, valued at roughly $1.8 billion, marking the eighth consecutive month of positive inflows for the region.

China remained the primary driver of Asian demand.

Funds in Hong Kong added around $732 million during the month — a record inflow — supported by new ETF product launches, while Mainland Chinese gold funds also continued attracting capital.

The World Gold Council said demand in the region has been supported by elevated geopolitical tensions, declining bond yields, and ongoing gold purchases by central banks.

“The region remains important to watch, with year-to-date flows currently on pace to challenge last year’s record total,” the report noted.

Although gold prices have stalled in recent weeks, analysts broadly continue to view the longer-term trend as constructive, particularly if geopolitical tensions persist or inflation pressures intensify further later this year.