Gold is in high demand as a safe asset, since such safe havens as US government bonds and the dollar have lost their appeal due to President Donald Trump’s erratic policies, says Barbara Lambrecht, commodity analyst at Commerzbank.
European Central Bank (ECB) officials have recently addressed the connection between the record growth of the gold market and risk perception in financial markets. Investing in the yellow metal in turbulent times is attractive due to the absence of counterparty risk if gold is held in physical form. In addition, the supply of precious metal is inelastic and limited, which preserves its intrinsic value.
The ECB says investors have recently favored gold with physical delivery. According to Bloomberg, this resulted in COMEX gold inventories surging 150% to a record 45 million ounces between December 2024 and early April 2025.
European investors are also exposed to the yellow metal via derivatives. Their gross notional value rose 58% to 1 trillion euros ($1.13 trillion) in the period from November last year to the end of March this year.