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A strange disconnect is playing out in commodities markets. Even as conflict escalates in the Middle East, investors are pulling money out of gold ETFs at the fastest pace on record.
Bloomberg Intelligence data show that roughly 100 commodity-focused ETFs in the U.S. have seen about $11 billion in net outflows so far in March, the largest monthly withdrawal since at least 2005. The SPDR Gold Shares ETF (GLD) alone accounted for more than $7 billion of that exodus, while silver ETFs saw roughly $1.4 billion in redemptions.
The exodus has puzzled market participants who would normally expect demand for perceived havens to rise as geopolitical tensions flare.
“It’s unusual for commodity ETFs to see record outflows during a selloff, given their typical role as an inflation and risk hedge,” said Athanasios Psarofagis, an analyst at Bloomberg Intelligence. “What’s striking is that the move is being driven largely by gold and silver, not oil ETFs.” The United States Oil Fund (USO), by contrast, has attracted around $400 million in inflows this month.
Gold prices have fallen roughly 15% since the conflict with Iran began in late February, while silver is down 25%. Over the same period, the S&P 500 has declined 5%.
Yet beneath the surface-level divergence between price action and fund flows, the long-term case for gold remains intact.
Robin Brooks, a senior fellow at the Brookings Institution and a former chief currency strategist at Goldman Sachs, argues that the recent selloff does not invalidate gold’s status as a safe haven.
In a recent analysis, Brooks noted that the S&P 500 has fallen only 5% since the conflict began — a decline that is not severe enough to trigger the kind of broad risk-off environment that typically activates gold’s haven properties.
“Russia’s invasion of Ukraine didn’t really trigger much of a rally in gold either, and the S&P 500 — on a similar time scale — is almost identical to now,” Brooks said. He pointed out that the recent decline in gold prices looks more like a positioning flush than a fundamental breakdown in its safe-haven role.
For Brooks, the longer-term case for gold — as a hedge against currency debasement — also holds firm.
“Fiscal policy in the U.S. and elsewhere is just as reckless as before the war, so the search for safe havens from debt monetization will persist,” he said.
That view aligns with gold’s strong performance in late 2025 and early 2026, well before the current conflict began. Prices had already been rising on concerns over ballooning fiscal deficits in major economies, suggesting that the debasement trade was already in motion before geopolitical tensions took center stage.
Analysts increasingly see the current outflows as a short-term phenomenon rather than a rejection of gold’s underlying investment thesis.
“Investors were jittery to get out and lock in those gains,” Psarofagis said, noting that gold had already rallied sharply before the war. “Most investors are probably up on it, and that’s who sold hardest.”
Carley Garner, senior commodity strategist at DeCarley Trading, echoed that view. “Many of the metals buyers experienced buyer’s remorse after taking a quick, large haircut and are now looking for the next move,” she said.
Brooks offered another explanation: heightened volatility across markets has triggered margin calls for some hedge funds and institutional investors, forcing them to sell profitable positions — including gold — to raise cash.
“That doesn’t mean gold’s hedging properties are invalid,” he said. “It just reflects the complexity of the current market environment.”
The structure of the outflows points to a classic profit-taking dynamic driven by retail investors who entered the market relatively recently.
BI data show that commodity ETFs attracted nearly $7 billion in February, marking the ninth straight month of inflows. A significant portion of that money came from retail investors who had little prior exposure to precious metals.
“The crazy run-up in precious metals before the war no doubt sucked in lots of retail investors who didn’t trade things like gold before,” Brooks said. “It’s possible that this — at least right now — is making precious metals trade more like risk assets.”
Still, he emphasized that a broader investor base does not invalidate gold’s long-term role as a haven or a hedge against currency debasement.
For long-term allocators, the record outflows from gold ETFs may be jarring. But the three pillars that underpin gold’s value proposition — geopolitical hedging, currency debasement protection, and its role as a non-sovereign store of value — remain in place. At least for now, none of them have cracked.
