Gold Rallies Without ETF Support - Who's Really Buying The Metal?

Gold prices have risen about 20% this year as a result of geopolitical tensions and changing expectations of the U.S. monetary policy. However, key pillar of gold demand seems to be weakening: ETF investors.

According to data collected by Bloomberg, total holdings of gold in ETFs fell by almost 30 tons last week, the biggest weekly decline in more than two years. The decline comes even as bullion continues trading at record levels, sparking concerns about the true sources of the gold price rally.

For example, the biggest gold ETFs, such as the SPDR Gold Trust (NYSE:GLD) and the iShares Gold Trust (NYSE:IAU), usually see inflows when gold prices rise. When investors buy shares in these funds, the ETFs must add physical bullion to back new units, which has historically amplified upward moves in the metal.

In this case, however, the price rally seems to have different sources.

Dollar Weakness, Rate-Cut Bets Lift Gold

Gold prices rose as the U.S. dollar fell for a third session in a row, driven by investors’ reassessment of the Fed's rate policy after a sharp decline in crude oil prices.

Oil prices fell as Trump signaled that the Israel-Iran clash could be nearing an end, with world leaders hinting at possible interventions to stabilize global energy prices. The decline in crude prices also eased inflationary concerns, which had been keeping interest rates high.

According to Bloomberg, which cited Bart Melek, global head of commodity strategy at TD Securities, lower crude prices may boost gold prices by keeping inflation high but not high enough to dissuade the Fed from cutting interest rates later this year. This may be beneficial for gold prices, since it does not earn interest.

If ETFs Aren't Buying, Who Is?

The disparity in this regard suggests there may be other buyers contributing to the gold rally.

The demand for gold can be attributed to a number of different sources, including central banks, futures markets, and physical investment. In its latest report on Gold Demand Trends, the World Gold Council noted that central banks continued to be significant buyers of gold in recent years, while investment in bars and coins also contributed to gold consumption worldwide. Total global gold demand exceeded 5,000 tonnes in 2025, with strong investment activity including bar and coin buying.

Data from the CFTS on market positioning can be used to assess how hedge funds affect gold prices. Large speculative traders hold about 160,145 net-long gold futures contracts as of March 3. That position rose slightly week-over-week, showing modest bullish sentiment. However, the net-long level remains near a two-year low, suggesting hedge funds are not aggressively chasing the rally.

For now, the unusual divergence suggests the current rally may be driven less by ETF investors and more by other pockets of demand across the broader gold market. This dynamic could decide how sustainable the advance proves in the months ahead.

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This article Gold Rallies Without ETF Support — Who's Really Buying The Metal? originally appeared on Benzinga.com