Gold ETF leads decline, commodity ETF sees record outflows of $11 billion in a single month.

Notice that, as the Middle East conflict continues to disrupt the market, ETF investors are withdrawing funds from commodity products at the fastest pace on record. Around 100 ETFs covering precious metals and broad commodity funds have seen a withdrawal of approximately $11 billion. According to data going back to at least 2005, although March is not yet over, this amount has already set a record for the largest monthly outflow of funds in history. The most significant outflows are in gold-related funds, such as SPDR Gold Shares (GLD.US), which has seen over $7 billion withdrawn, and other metal funds have not been spared. Silver ETFs have also experienced redemptions of approximately $1.4 billion. Analyst Athanasios Psarofagis states that given the strong performance of gold before the outbreak of war, "investors are eager to exit to lock in profits. Most investors are likely to have made significant profits, and they are the ones selling the most aggressively." Gold has performed weakly during the Iran conflict, partly because investors are "selling the goods for cash" as the war prompts investors to sell liquid and profitable positions. Furthermore, expectations of interest rate hikes and a stronger dollar have also increased downward pressure on gold, which offers no interest. Since the US and Israel began attacking Iran on February 28, the commodity market has been thrown into chaos due to the actual closure of the Strait of Hormuz. The oil and natural gas markets have intensified volatility across the entire financial market. Brent crude prices surged past $104 on Tuesday. This month, the flow rates of funds into and out of energy-related products have reached levels unseen in years. For some market observers, the historic outflows from the commodity category come as a surprise, as these funds are typically seen as safe havens during times of economic uncertainty. Psarofagis adds, "During a period of commodities market sell-off, it is unusual to see record outflows from commodity ETFs - considering their usual role as inflation and risk hedges, it is a significant turn of events. What is surprising is that this volatility is mainly driven by gold and silver, rather than crude oil ETFs." For example, the US Oil Fund (USO.US) has received around $400 million in fund inflows so far this month. Data shows that March marks a significant reversal for commodity ETFs, especially in metals. In February, these funds attracted nearly $7 billion in inflows, achieving nine consecutive months of capital growth. The last time investors withdrew from this category was in May 2025, when easing trade tensions weakened demand for safe-haven assets like gold. Carley Garner, senior commodity strategist and broker at DeCarley Trading, said, "Many metal buyers are experiencing 'buyer's remorse' after rapid and substantial losses, and are currently looking for the next move. We are in an extremely dysfunctional environment."