ETF investors are withdrawing capital from commodity products at the fastest pace on record as ongoing Middle East conflicts continue to unsettle markets. Approximately 100 ETFs, including those tracking precious metals and broad-based commodity funds, have seen outflows totaling around $11 billion. Although March is not yet over, this figure already marks the largest monthly capital withdrawal in history, based on data going back to at least 2005.

Gold-focused funds experienced the most concentrated outflows. For instance, SPDR Gold Shares (GLD.US) witnessed withdrawals exceeding $7 billion, while other metal funds also faced significant redemptions. Silver ETFs similarly saw outflows of approximately $1.4 billion.

According to analyst Athanasios Psarofagis, given gold's strong performance prior to the outbreak of hostilities, "investors are rushing to exit and lock in profits. Most investors likely had substantial gains, and they are the ones selling most aggressively." Gold's underperformance during the Iran conflict has been partly attributed to investors "selling assets for cash," as the war prompted the liquidation of highly liquid and profitable positions. Additionally, expectations of interest rate hikes and a stronger U.S. dollar have increased downward pressure on gold, which does not offer yield.

Since the U.S. and Israel began strikes against Iran on February 28, commodity markets have been thrown into disarray due to the effective closure of the Strait of Hormuz. Oil and natural gas markets have exacerbated volatility across financial markets, with Brent crude prices surpassing $104 per barrel on Tuesday. This month, inflows and outflows for energy-related products have reached levels not seen in years.

For some market observers, the historic outflow from commodity ETFs is surprising, as these funds are typically viewed as safe havens during periods of economic uncertainty. Psarofagis added, "During a sell-off in commodity markets, commodity ETFs are experiencing record outflows—an unusual twist given their traditional role as hedges against inflation and risk. What's striking is that this movement is largely driven by gold and silver, rather than crude oil ETFs." For example, the United States Oil Fund (USO.US) has received approximately $400 million in inflows so far this month.

Data indicate that March marks a significant reversal for commodity ETFs, particularly those focused on metals. In February, these funds attracted nearly $7 billion in inflows, extending a nine-month streak of capital attraction. The last time investors withdrew funds from this category was in May 2025, when easing trade tensions reduced demand for safe-haven assets like gold.

Carley Garner, Senior Commodity Strategist and Broker at DeCarley Trading, noted, "Many metals buyers are experiencing 'buyer's remorse' after rapid and significant losses and are now looking for their next move. We are in an extremely dysfunctional environment."