Investors Returned to Gold ETFs in 2nd Week After Booking Profits in 1st Week
•February 20, 2026
0
Why It Matters
The flow reversal signals shifting risk appetite and hints at future gold price volatility as monetary‑policy outlooks tighten. Asset managers and traders will watch these trends to gauge safe‑haven demand and portfolio rebalancing pressures.
Key Takeaways
- •First-week gold ETF outflows hit $3.87 billion.
- •Second-week inflows recovered $2.34 billion, still net outflow.
- •AUM fell to $655 billion then rose to $664.2 billion.
- •Warsh nomination spurred hawkish rate expectations, prompting outflows.
- •Europe and UK led early outflows; US, China led inflows.
Pulse Analysis
The recent ebb and flow in gold ETF activity underscores how quickly investor sentiment can pivot on monetary‑policy cues. Kevin Warsh’s nomination to the Federal Reserve Board injected a hawkish narrative into markets, prompting a rush to liquidate gold positions as traders anticipated higher rates. This behavior aligns with the broader pattern where safe‑haven assets lose appeal once the prospect of tighter policy looms, even amid lingering geopolitical risks such as the U.S.–Iran standoff.
Regional dynamics further illuminate the story. European investors, particularly in the United Kingdom, led the initial wave of outflows, reflecting heightened sensitivity to policy uncertainty and currency fluctuations. Conversely, the United States and China emerged as net inflow contributors in the second week, suggesting a nuanced risk calculus where some market participants still view gold as a hedge against potential macro‑economic turbulence. The modest rebound, however, was insufficient to offset the earlier $3.87 billion exodus, leaving the sector with a net outflow and a slightly lower AUM baseline.
For portfolio managers, the data signal a cautious outlook for gold‑linked products. While the metal retains its safe‑haven allure, the prevailing expectation of a more aggressive Fed could suppress demand, especially if inflation pressures ease. Investors should monitor upcoming Fed communications and geopolitical developments, as these factors will likely dictate whether gold ETFs can sustain inflows or continue to see capital withdrawals. Diversification strategies may need to adjust, balancing gold exposure with assets that perform better in a rising‑rate environment.
Investors returned to gold ETFs in 2nd week after booking profits in 1st week
Investors encash $3.87 billion from ETFs in the first week, invest $2.34 billion in the second week
By Subramani Ra Mancombu
Updated – February 20, 2026 at 09:55 PM
Inflows into physically‑backed gold exchange‑traded funds returned in the second week of February, after investors booked profits in the first week. However, inflows were lower than outflows.
According to data from the World Gold Council (WGC), assets under management (AUM) decreased to $655 billion in the week ending February 6, compared with $668.7 billion the week before. It then increased to $664.2 billion in the week ending February 13. While investors encashed $3.87 billion in the first week, they invested $2.34 billion in the second week.
Investments in gold ETFs were in line with the movement of precious metals in the global market. Gold surged to a record high of $5,608 in the fourth week of January before paring its gains. Investors began to shift from gold to other assets such as bonds after U.S. President Donald Trump nominated Kevin Warsh as the next Fed chief.
Hawkish Warsh impact
Gold is currently trading around $5,030.77 an ounce, gaining nearly 1 % on Friday following geopolitical tensions over the U.S.–Iran standoff.
Warsh is perceived by the market as hawkish on interest rates, prompting traders to move out of precious metals, which had been seen as a safe‑haven bet amid a weakening dollar, tariff wars, and geopolitical tensions.
Europe, which began to witness outflows from ETFs in January (encashing $942 million), continued to book profits in the first week of February. Outflows in Europe were $3.08 billion, but inflows rose to $914 million in the second week.
Outflows and inflows in North America were almost similar, with investors encashing $692.6 million in the first week and returning $625 million in the second week.
Indian trend
Gold holdings fell by about 30 tonnes in the first week (compared with the week ending January 30) to 4,114.2 tonnes, before rising 15 tonnes in the second week. Europe witnessed the biggest fall of 21.2 tonnes, followed by North America at 5.8 tonnes.
Although detailed data on the Indian gold‑ETF trend are limited, provisional figures show AUM dropped from $19.8 billion in the last week of January to $18.5 billion. In the second week, it edged up to $18.6 billion.
Investors in the UK led ETF encashments, pulling out $1.91 billion in the first week, after a $363 million outflow in the last week of January. In the second week, inflows in the UK were $272 million.
Cautious Japanese
Outflows in the U.S. were the second‑highest at $655 million in the first week, followed by Germany ($522 million), France ($474.3 million) and China ($413 million). In the second week, investors in South Africa and Turkey chose to book profits, while other countries saw investments resume.
In the second week of February, investors in the U.S. and China led the return, investing $567.9 million and $405.7 million, respectively. Japanese investors, whose encashment was minimal when bullion prices crashed in the first week, were the third‑largest contributors, adding $345.3 million.
Inflows in the UK, Germany and Switzerland were $272.1 million, $245.2 million and $217.9 million, respectively. France also saw an investment of $186 million. Details on Indian ETF flows are awaited.
0
Comments
Want to join the conversation?
Loading comments...