With tensions still high in Eastern Europe and the Middle East, gold’s status as a safe-haven investment has the yellow metal and the corresponding exchange traded funds in focus, but bullion faces a challenge from another safe-haven: A stronger U.S. dollar.

The International Monetary Fund believes the conflicts in Eastern Europe and the Middle East could hamper global economic output this year. Slack expectations for global GDP growth could boost the allure of ETFs such as the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL).

The Ukrainian crisis and unrest in the Middle East prompted investors to seek a potential hedge against a deterioration of the situation, driving US$80.6mn and US$23.1mn into gold and oil ETPs, respectively. While prices are yet to react to the heightened risks, with the Gaza conflict threatening to escalate following an Israeli missile attack on a UN school for refugees and the Ukrainian Prime Minister resigning,” said ETF Securities in a new research note.

Even with global tensions high, gold ETFs did not see substantial inflows last week. In fact, investors pulled almost $137 million from GLD while IAU saw modest inflows. GLD is still up $485.4 million in new assets since the start of July. [Global Tensions Have Gold ETFs Shining]

Decent economic data and strong U.S dollar pressured gold and silver ETFs last week as the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) added almost a third of a percent. UUP, the ETF answer to the U.S. Dollar Index, has added almost $13 million in new assets this month.

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