In what is becoming a familiar refrain this year, international geopolitical tensions are prompting some investors to put new money to work in gold exchange traded funds.

“Investors bought ETFS Physical gold ETPs at the highest pace in 17 months as geopolitical risks continued to rise and Argentina approached sovereign default again. The European Union and US have increased sanctions on the Russian economy reflecting the growing animosity between the world’s super-powers. That has led to growing demand for haven assets,” said ETF Securities in a new research note.

However, inflows to U.S.-listed gold-backed ETFs were modest last week with the iShares Gold Trust (NYSEArca: IAU) leading the way with $12.5 million of inflows. Investors added almost $3.3 million to the Merk Gold Trust (NYSEArca: OUNZ).

OUNZ, which debuted earlier this year, is rising in popularity in part because it is the first ETF in the U.S. to deliver physical gold to investors when they redeem their shares. [Merk Gold Trust Makes First Delivery]

After such a long stretch of equity market outperformance, many investors appear to be protecting themselves against rising geopolitical risk by adding perceived defensive assets such as gold to their portfolios. Last week when the gold price fell 0.6%, investors used the opportunity to add to allocations, with US$106.4mn flowing into physical gold ETPs (US$109.6mn into all long gold ETPs),” said ETF Securities.

Last month, the SPDR Gold Shares (NYSEArca: GLD) added $485.4 million in new assets even as it fell in unison with the S&P 500.

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