Gold exchange traded products, including the SPDR Gold Shares (NYSEArca:GLD), iShares Gold Trust (NYSEArca:IAU) and ETFS Physical Swiss Gold Shares (NYSEArca:SGOL), have traded modestly higher over the past week amid escalating geopolitical tensions between the U.S. and North Korea.

While news of potential miniaturization of a nuclear device by North Korea was cited in a Japanese Defense Ministry annual report earlier on Tuesday, the decline in global markets during U.S. trading hours coincided with a report from the Washington Post, reports Reuters.

Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets.

However, traders lose interest in gold when rates rise since the bullion does not produce a yield. Gold also received an endorsement from Ray Dalio’s Bridgewater Associates, the world’s largest hedge fund.

“When it comes to assessing political matters (especially global geopolitics like the North Korea matter), we are very humble. We know that we don’t have a unique insight that we’d choose to bet on …,” said Bridgewater in a note posted by Business Insider. “We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don’t have 5-10% of your assets in gold as a hedge, we’d suggest you relook at this. Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this (and if you do have an excellent analysis of why you shouldn’t have such an allocation to gold, we’d appreciate you sharing it with us.).”

Related: 17 ETFs to Satisfy Your Gold Fever

The good news for gold ETFs is that inflation could serve as a catalyst for the yellow metal. Rising inflation could also prove to be a catalyst for gold ETFs. By some metrics, the Fed has under-estimated U.S. inflation, which could prove beneficial to gold because the yellow metal is historically a popular inflation fighter.

Flows data suggest investors need some convincing to consider gold ETFs. GLD has bled nearly $2.6 billion in assets since the start of the third quarter, a figure hardly offset by the $45.7 million that has flowed into the rival IAU.

For more information on the gold market, visit our gold category.

Tom Lydon’s clients own shares of GLD.

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