Despite a sharp gold price correction in January, investor demand for the precious metal has remained remarkably resilient. Gold-backed exchange-traded funds (ETFs) continued to accumulate metal in February, highlighting the ongoing appetite for safe-haven assets amid geopolitical uncertainty and shifting global economic conditions.
According to data from the World Gold Council, global gold ETFs added 26 tonnes of gold in February, pushing total holdings to a new all-time high of 4,171 tonnes. Assets under management in gold-backed funds also climbed to a record $701 billion, even as bullion prices experienced temporary weakness.
This marked the ninth consecutive month of positive ETF inflows, reinforcing the strength of investor demand for gold.
However, while ETFs provide convenient exposure to the gold price, many investors are increasingly recognising the long-term advantages of owning physical bullion, particularly when accumulated through FirstGold’s cost averaging strategy, which helps strengthen purchasing power over time.
North American Investors Lead Global Gold Demand
North America once again dominated ETF inflows during February, with funds adding 27.9 tonnes of gold, valued at approximately $4.7 billion.
This represents the ninth straight month of inflows into North American gold ETFs — a trend analysts say is historically significant.
The World Gold Council noted that such sustained demand has only occurred during periods of heightened systemic risk, including the Global Financial Crisis and the COVID-19 pandemic.
During those periods, investors increasingly turned to gold as a defensive asset to diversify portfolios and protect purchasing power during economic instability.
Four Key Drivers Behind ETF Gold Demand
The World Gold Council identified several factors behind the strong ETF inflows in North America:
• Rising geopolitical tensions, particularly involving Iran
• Lower opportunity cost of holding gold due to weaker interest rates and a softer US dollar
• Ongoing global trade uncertainty and tariff disputes
• Growing concern about equity market valuations, particularly in technology and SaaS sectors
These factors have combined to reinforce gold’s role as a global safe-haven asset during periods of uncertainty.
Strong Inflows Across Asia
Asian investors also continued to build gold exposure, with regional funds adding 11 tonnes of gold worth approximately $2.3 billion.
Japanese funds led the inflows, driven by domestic political uncertainty, rising tensions with China, and a weakening yen.
Chinese gold ETFs reported modest inflows due to fewer trading days during the Lunar New Year holiday, while Indian funds also continued attracting investors despite some early-month profit-taking.
India has traditionally been a market dominated by physical gold ownership, but ETF products have gained popularity in recent years as financial markets evolve.
Europe the Only Region to Record Outflows
Europe was the only region to report net ETF outflows in February, with funds shedding 13 tonnes of gold valued at $1.8 billion.
Most of the redemptions occurred early in the month as January’s sell-off spilled into February trading. Later inflows partially offset these withdrawals but were not sufficient to reverse the overall trend.
The United Kingdom accounted for the majority of these outflows due to its large share of the European ETF gold market.
World Gold Council analysts noted that the selling was largely concentrated in UK-listed funds and does not indicate a broader structural shift away from gold in Europe.
ETF Convenience vs Physical Gold Ownership
Gold ETFs remain a popular way to gain exposure to the gold price. Investors can buy or sell ETF shares quickly through financial markets without needing to store or transport physical bullion.
However, owning ETF shares is fundamentally different from owning physical gold.
ETF investors hold a financial instrument that tracks the gold price, rather than the metal itself. In contrast, physical gold provides direct ownership of a tangible asset with no counterparty risk.
This is why many long-term investors prefer to accumulate physical bullion rather than paper exposure, particularly during periods of financial uncertainty.
Why FirstGold Cost Averaging Strengthens Purchasing Power
For investors seeking to build a long-term gold position, FirstGold’s cost averaging strategy offers a disciplined and effective approach.
Rather than trying to time short-term market movements, cost averaging allows investors to accumulate physical bullion gradually over time.
Key benefits include:
• Reduced exposure to short-term price volatility
• Improved long-term purchasing power
• Consistent accumulation through market cycles
• Elimination of emotional market timing
By purchasing gold regularly, investors naturally buy more when prices are lower and less when prices are higher, helping smooth the overall acquisition cost.
In a market environment where ETFs continue to attract capital and global demand remains strong, disciplined physical bullion accumulation can provide long-term financial security and wealth protection.
Gold Trading Volumes Remain Elevated
While gold trading volumes declined slightly from January’s record highs, activity remains historically strong.
Average daily trading volume in February reached $478 billion, down from $623 billion in January, but still 32 percent above the 2025 average.
In tonnage terms, trading averaged 2,969 tonnes per day, reflecting some profit-taking and lighter Asian participation during the Lunar New Year holiday.
Over-the-counter trading also remained robust, averaging $245 billion per day, highlighting continued institutional engagement with the gold market.
Despite short-term price corrections, global gold demand remains strong, with ETF inflows reaching new records and investors continuing to seek safe-haven assets.
While ETFs provide convenient market exposure, physical bullion ownership offers long-term security and independence from financial system risks.
Through FirstGold’s cost averaging approach, investors can steadily build physical gold holdings, strengthening purchasing power and protecting wealth through changing economic cycles.
Disclaimer: The information provided in this article is for general information purposes only and does not constitute financial, investment, or trading advice. Market conditions can change rapidly and past performance is not indicative of future results. Readers should conduct their own research or consult a qualified financial adviser before making any investment decisions. FirstGold accepts no liability for any decisions made based on the information contained in this article.
