Chinese gold exchange-traded funds (ETF) inflows reach fresh daily record amid rising trade tensions.

Recent reports reveal that Chinese gold ETFs experienced a significant uptick, culminating in a daily record of nearly 3 billion yuan (US$410M) in inflows just last Thursday. This trend reflects heightened investor interest in gold as a safe-haven asset amidst escalating trade tensions and economic uncertainties. Analysts from ING, Warren Patterson and Ewa Manthey, noted that although speculative interest in Comex gold futures remains subdued, investor demand for gold appears to be growing as a protective measure against potential market volatility. The current landscape reveals a dual trend in the gold market: while Chinese gold ETFs are attracting vast amounts of investment, the U.S. market has witnessed a decline in managed money net longs, marking the largest weekly decrease since early October 2023. This suggests that while some investors are pulling back from other asset classes—possibly due to margin calls—others are seeking safety in gold assets. Additionally, the Shanghai Futures Exchange data indicates a considerable reduction in weekly inventories for base metals, particularly copper, which saw a drop of nearly 43,000 tonnes. This trend indicates that industrial demand is being supplanted by investment demand for gold, further emphasizing the metal's status as a refuge for investors. As markets anticipate ongoing volatility, driven in part by U.S. trade policy statements including those from President Donald Trump, the gold price has climbed significantly, recently hitting around $3,245 per ounce. This increase, exceeding the $3,200 mark, highlights gold's consolidation phase amidst an environment of geopolitical uncertainty and mixed economic signals. Overall, while gold ETFs in China soar, the U.S. market exhibits signs of hesitancy, creating a backdrop of contrasting dynamics that could be pivotal for investors navigating this turbulent financial landscape. As these trends unfold, it remains critical for investors to stay informed and cautious, given the impactful nature of tariffs and international relations on commodity prices.