Related: Gold ETFs: Ready to Glitter Some More

While investment demand for gold-related ETFs has diminished in 2017, holdings continue to grow, adding 56 metric tons in the second quarter, which brought total inflows over the first half of the year to 168 metric tons, with most of the increase coming out of European ETFs as holdings reached a record 978 metric tons. The heightened demand out of Europe may be associated with a spike in political risk amidst a year of contentious elections on a wave of rising populism and the ongoing Brexit negotiations.

“Using the past 20 years of monthly data, policy uncertainty, as measured by the U.S. Economic Policy Uncertainty Index, has had a more statistically significant relationship with gold prices than financial market volatility. In fact, even after accounting for market volatility, policy uncertainty tends to drive gold prices,” according to BlackRock.

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