Amid escalating geopolitical conflicts in the Middle East, COMEX gold prices surged past key thresholds, sparking renewed investor interest in gold-related ETFs. The secondary market for these ETFs has seen consecutive days of price gains, reflecting a broader trend of capital inflows into gold assets.
Strong Year-to-Date Gains Highlight ETF Growth
Data from 2025 reveals robust performance across gold-related ETFs, with year-to-date returns exceeding 27.9% across the board. Notably, six ETFs tracking the Shanghai-Shenzhen-Hong Kong (SSH) Gold Stock Index outperformed, all posting gains above 41%. The overall market size of gold-related ETFs has more than doubled since the start of the year, climbing from 72.6 billion yuan to 163.1 billion yuan—a 124.7% increase.
Since June 10, ETFs tied to the SSH Gold Stock Index surged over 7%, while Shanghai Gold ETFs and other gold ETFs recorded gains above 2%. Leading products such as the Yongying CSI SSH Gold Industry Stock ETF posted a 43.46% year-to-date return, with peer ETFs from ChinaAMC, ICBC, Guotai, Hua’an, and Ping An showing similarly strong performance ranging from 41.3% to 43.3%.
Recovery in ETF Shares Following Market Volatility
After earlier redemptions triggered by gold price fluctuations, many gold ETFs are now regaining investor confidence. Since the outbreak of the Israel-Iran conflict, about half of the gold-related ETFs’ share volumes have increased. Overall ETF shares expanded by over 10.5 billion units this year, adding roughly 90.5 billion yuan in market value.
Several ETFs have seen their asset scale double or even triple. For instance, the Yongying ETF’s scale grew from 1.65 billion yuan at the start of the year to 4.76 billion yuan, nearly tripling. The E Fund Gold ETF expanded by 13.24 billion yuan to 26.5 billion yuan, while Guotai’s Gold ETF grew from 7.14 billion yuan to 18.54 billion yuan. Bosera Gold ETF also nearly doubled its scale to 29.26 billion yuan. Other prominent ETFs including Huaxia, ICBC, Fullgoal, and CCB Principal have all reported significant scale growth since January.
Fund Managers See Strong Medium- and Long-Term Outlook for Gold
Fund companies attribute this inflow to a mix of geopolitical uncertainties, tariff tensions, and weakening credit in the U.S. dollar and Treasury securities. Central banks continue to accumulate gold reserves, underscoring its strategic importance as a safe-haven asset.
According to official data released by the People’s Bank of China and the State Administration of Foreign Exchange, China’s gold reserves reached 73.83 million ounces by the end of May 2025, marking the seventh consecutive month of growth.
Yongying Gold Stock ETF manager Liu Tingyu highlighted, “The geopolitical risks, especially around Iran, are amplifying global demand for safe-haven assets, strengthening gold’s upward price momentum.”
Hua’an Fund echoed this view, emphasizing the erosion of U.S. dollar credit amid the U.S. debt crisis as a driver for ongoing central bank gold purchases. The anticipated cycle of interest rate cuts by the U.S. Federal Reserve also supports gold’s medium- to long-term allocation value.
Tariffs and Inflation Fuel Gold’s Appeal
Liu also noted that the U.S. Federal Court of Appeals’ decision to extend deadlines related to tariff enforcement suggests ongoing tariff implementation, which may ease internal U.S. political conflicts and reduce downward pressure on gold prices.
Furthermore, gold’s long-term positive correlation with inflation, coupled with rising oil prices, could further bolster gold valuations.
U.S. Fiscal Deficit Deepens, Boosting Gold Demand
The weakening creditworthiness of the U.S. dollar and debt remains a key factor. In May alone, the U.S. fiscal deficit hit $316 billion, pushing the annual deficit 14% higher year-over-year. Market confidence in U.S. fiscal discipline continues to wane, with legislation such as the “America COMPETES Act” potentially worsening fiscal deficits.
Liu explained, “The avoidance of extreme risks related to U.S. debt is expected to become a major driver for gold prices going forward.”
Outlook: De-Dollarization and Rising Gold Allocation
As uncertainties over tariffs and the U.S. fiscal outlook persist, global “de-dollarization” trends are expected to accelerate. This will likely motivate investors to increase gold allocations continuously.
Meanwhile, gold mining companies are expanding production, and gold stocks are poised for rapid growth. The jewelry sector is also entering a phase of premium product development, signaling further growth opportunities.
