In March, global physically-backed gold exchange-traded funds (ETFs) experienced their largest monthly net outflow on record. Massive selling in North American markets nearly halved the cumulative gains built up over the first quarter, while continued buying in Asian markets partially offset the selling pressure from the West.
According to data released by the World Gold Council on April 8, global gold ETFs saw net outflows of $12 billion in March, the largest monthly outflow ever recorded. This reduced the global net inflow for the first quarter to half of what was previously anticipated.
Despite this, the first quarter still marked the seventh consecutive quarter of net inflows globally. Holdings in global gold ETFs increased by a net 62 tonnes during the quarter. Assets under management (AUM) ended the quarter at $606 billion, which is 9% higher than the level for the full year 2025. The broader trend of net inflows was not reversed by the significant volatility in March.
The Asian market bucked the global trend, recording net inflows of $14 billion in the first quarter, setting a record for the strongest quarterly inflow ever. China contributed approximately $8 billion of this total. The persistent buying in Asia effectively counterbalanced the selling pressure from Western markets, allowing the overall global inflow trend to be maintained.
North America was the primary source of global gold ETF outflows in March. The region saw a net outflow of $13 billion for the month, not only setting a historical record but also ending a streak of nine consecutive months of net inflows. North America was the only region to record a net outflow for the quarter.
The World Gold Council noted that a combination of factors triggered this round of selling. Broad risk-off sentiment stemming from the US-Iran conflict impacted most asset classes, leading US investors to sell previously well-performing assets, including gold, to raise liquidity. Concurrently, Commodity Trading Advisors (CTAs) held substantial long positions by mid-March, which amplified selling momentum during the gold price decline, forcing some weaker holders to liquidate positions. Furthermore, a stronger US dollar, rising interest rates, and a significant shift in market expectations for Federal Reserve rate cuts—from anticipating cuts in 2026 to now expecting rates to remain unchanged until September 2027—all increased the opportunity cost of holding gold.
Historically, North America has experienced inflows lasting more than nine months on only two other occasions: during the global financial crisis and the COVID-19 pandemic. Both periods ended with sharp reversals. It is noteworthy that the fourth to sixth largest monthly outflows on record all occurred between November 2020 and March 2021 during the pandemic, yet net inflows in the region rebounded to $8 billion within the following 12 months. In a similar cycle following the financial crisis, net inflows reached $16 billion.
Europe recorded a modest net outflow of $154 million in March, compressing the region's net inflow for the first quarter to just $27 million. Germany, Italy, and France were the primary sources of outflows for the month.
European flows showed a high correlation with the gold price trend: outflows were pronounced during the gold price decline in the second half of March, while a slight rebound in flows occurred as the gold price recovered towards the month's end.
Fundamentally, the European Central Bank held rates steady in March and signaled it would consider raising rates if inflation accelerates. Inflation concerns driven by geopolitical tensions pushed regional bond yields higher, further increasing the opportunity cost of holding gold for local investors. Additionally, the depreciation of the Euro against the US dollar exacerbated losses on currency-hedged products, an effect particularly noticeable in the Swiss market, creating an additional drag on regional flows.
Asian gold ETFs recorded another net inflow of $2 billion in March, marking the seventh consecutive month of positive inflows. This drove the cumulative net inflow for the first quarter to $14 billion, a record high for any quarter.
China was the main driver of Asian inflows. Rising geopolitical risks boosted safe-haven demand, leading to net inflows of approximately $8 billion in China during the first quarter, accounting for the vast majority of the regional total.
The Indian market also continued its accumulation trend. Indian investors recorded net purchases of $177 million in gold ETFs in March, bringing the cumulative net inflow for the quarter to $3 billion, demonstrating sustained growth in gold allocation demand in that market.
Other regions, primarily Australia and South Africa, saw a small net outflow of $27 million in March, narrowing the first-quarter net inflow to $285 million. However, overall holdings in these regions remained relatively stable despite increased gold price volatility.