Fund Flows & Central Banks Driving Gold Prices

Gold prices have pushed higher within the past year, with much thanks going to retail investors seeking safe haven assets. But this year is a bit different. Fund flows and central banks have been the primary drivers of the metal’s prices in 2025.Investors are still seeking gold as a hedge against inflation and market uncertainty. But a Kitco News report noted that online trading platform IG is seeing an increase in physical flows and central bank demand. Myriad factors drive gold demand that is pertinent to the buyer, retail or institutional. “Some see it as an inflation hedge, others as a safe haven,” it said. “For many, it’s an alternative to the Dollar or interest-paying government bonds. At eyeQ, our smart models take all those views into account — inflation expectations, risk appetite (like the VIX), the US Dollar and real yields.” As noted in the chart below, there’s been a dip in macro relevance alongside the price of spot gold pushing higher. Essentially, the drop in macro relevance indicates gold-buying activity by central banks and the flow of money by funds such as ETFs.“©heck the macro relevance score in the [above] chart,” IG said. “A high number here means macro drivers dominate, and our signals are stronger. A low number suggests flows (like central bank buying) are more influential.” IG also noted that gold miners could present a better value-for-money option given gold’s rally over the last year. “For gold bugs, though, there may be better value elsewhere,” IG added. "Gold mining stocks, like Newmont, screen as far cheaper — currently 13% below fair value based on macro conditions.” Fortunately, Sprott has a pair of funds if investors want to get pure gold or mining exposure.2 Golden OpportunitiesFor a pure gold opportunity, consider the +Sprott Physical Gold Trust+ (PHYS). It offers easy access to pure-play gold exposure through, but it also adds a degree of flexibility by allowing investors to convert their fund shares into physical bullion. With exposure to gold via funds, investors avoid the logistics of storing gold. But they can always convert their shares to bullion if they want a more tangible investment feel. Another option for exposure is via miners, or more specifically, the Sprott Gold Miners ETF (SGDM B-). As demand for the metal rises, supportive services in the gold industry like mining can also exhibit bullishness. Rather than choosing individual mining stocks, SGDM adds broad-based exposure to miners. That eschews the overconcentration risk inherent in shares of single companies. SGDM seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of large-cap gold companies that trade on Canadian and U.S. exchanges.For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel. Disclosure Information An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below. Neither URNM nor URNJ are invested in any portion of AWS, Microsoft, or Meta. Past performance is no guarantee of future results.  One cannot invest directly in an index. Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance. Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi. Exchange Traded Funds (ETFs): SETM, LITP, URNM, URN, COPP, COPJ, NIKL, SGDM SGDJ Physical Bullion Funds: PHYS, PSLV, CEF, and SPPP