ETFs are losing trust: how to invest in gold now

XAU/USD

Key zone: 4,250.00 - 4,400.00

Buy: 4,450.00 (on strong positive fundamentals); target 4,750.00; StopLoss 4,350.00

Sell: 4,200.00 (on a pullback after retesting 4,350); target 4,000-1,850; StopLoss 4,300.00

Geopolitical conflicts, rising debt burdens in the world’s largest economies, instability in government bond markets, and the gradual diversification of foreign exchange reserves are simultaneously fueling two powerful sources of demand for gold: central banks and investment capital.

Central banks are once again turning gold into a strategic reserve asset. Even after the historic surge in prices, their purchases have not stopped.

A reminder:

Central banks still primarily buy physical gold for their official reserves. ETFs have mainly become a tool for private and institutional investors seeking liquid exposure to gold without having to buy, transport, and store bullion themselves.

In 2026, the line between the two segments began to blur slightly: some central banks started considering gold ETFs as an additional reserve-management instrument.

For example, the Bank of Korea invested in gold for the first time in 13 years, but instead of physical bullion, it chose 679,765 shares of the SPDR Gold Shares ETF worth a total of about $250 million.

For now, however, this is an exception rather than a new global model. According to the World Gold Council, only about 4% of central banks use gold-backed ETFs; banks predominantly acquire gold through the OTC market, while for physical storage they prefer standard London Good Delivery bars.

This suggests that ETFs are not replacing bullion, but rather creating an additional channel for gaining exposure to gold.

For large reserve managers, ETFs can be convenient for tactical position adjustments: they can be purchased quickly, the instrument is liquid, and transactions do not require the physical transportation of metal.

ETFs are becoming a kind of sentiment indicator for the investment market. Central banks generate relatively slow, structural demand. ETFs can add or remove dozens of metric tons of investment demand within just a few weeks. This is why ETF flows often amplify short-term movements in gold prices.

In the current market, the most rational approach is not “buy gold because central banks are buying,” but rather a portfolio-based strategy.

The choice — ETF or physical gold — depends on the objective.

• ETFs are better if an investor needs liquidity, low transaction costs, easy entry and exit, and the ability to quickly adjust position size.
• Physical gold is better if the primary objective is long-term ownership of an asset outside the financial infrastructure and minimizing dependence on intermediaries.
• Gold mining stocks should be considered separately if an investor deliberately wants greater sensitivity to the price of gold and is prepared to accept corporate risks.

For most liquid investment portfolios, a physically backed ETF is the most convenient way to establish a tactical or medium-term position in gold. For a “last-resort safety reserve,” the case for physical ownership remains stronger.

So, what does this mean?

ETFs have not replaced physical gold in central bank reserves. The Bank of Korea case does indeed demonstrate growing central bank interest in ETFs, but globally this remains a niche practice. However, this makes ETFs an especially important indicator for traders.

Central banks create fundamental long-term demand. ETFs reflect the speed at which investment capital enters and exits the market. When both flows move in the same direction, gold’s momentum can strengthen significantly.

After the powerful rally that has already taken place, the main source of profit today is not predicting the next all-time high, but properly managing the entry point, position size, and macroeconomic risk.

At current price levels, the rational strategy is not to chase another high, but to build a position in a controlled manner, monitor real interest rates and ETF flows, and keep gold as part of — rather than the foundation of — a diversified portfolio.

So we act wisely and avoid unnecessary risks.

Profits to y’all!