- Gold the preferred asset for investors preparing for a weaker USD
- Fears of a potential recession grow, now seen as the primary investment risk
- Trust in the US to deliver long-term returns wanes, confidence in Europe continues to grow
Wednesday 18th June 2025 – Amid market volatility and economic uncertainty, the latest quarterly Retail Investor Beat from trading and investing platform eToro reveals that retail investors see gold as the number one hedge in response to a weaker dollar.
The study, which surveyed 10,000 retail investors across 12 countries, revealed that nearly half (48%) of retail investors have either adjusted or plan to adjust their portfolios in anticipation of a weaker USD. When asked about their strategies for asset allocation in anticipation of a weaker USD, the most frequently cited response was to invest more in gold, mentioned by 29% of retail investors. This was followed by reducing investments in US stocks (25%), increasing investments in non-US stocks (24%), and holding more money in cryptoassets (24%).
Investor sentiment towards gold is bullish, with the majority (57%) expecting gold prices to rise in the next 6-12 months. 45% of retail investors already hold gold positions with half of them having started to invest in gold within the last two years. Among those not currently invested in gold, 27% are considering it.
Lale Akoner added: “Growing concerns about Washington’s fiscal trajectory and political credibility have created a cocktail of uncertainty and tension surrounding the dollar’s historic hegemony, which has seen a decline of around 8% so far this year. Retail investors are tactically addressing the dollar’s downward trend by reallocating into non-correlated assets like gold, a hedging behavior that reflects a more sophisticated understanding of risk – far from the outdated view of retail investors as ‘dumb money’.”
US long-term confidence wanes, Europe gains favour
Retail investors trust in the US as the region with the strongest long-term return potential is declining. From 45% in Q4 2024, confidence dropped to 34% in Q2 2025, confirming the ongoing shift. Only the youngest cohort of retail investors, the Gen Z, maintain the same level of optimism (45% in Q2 2025 compared to 46% at the end of 2024).
In contrast, sentiment towards Europe is improving, with 29% of investors seeing it as the region with the strongest long-term return potential, up from 20% in the last quarter of 2024. Sentiment towards returns from China rose from 24% in Q4 2024 to 26% in Q2 2025, emerging markets from 17% to 20%, Japan from 12% to 14%, the UK from 8% to 11% and Australia from 7% to 8%.
Lale Akoner commented: “The decline in confidence in the US as a bastion of long-term returns has prompted investors to seek opportunities beyond American borders, leading to increased geographical diversification. Concerns about fiscal sustainability, political instability, and macroeconomic uncertainties have driven retail investors to explore and grow their interest in other markets.
“Investors may be increasingly optimistic about Europe due to falling inflation, stronger consumer confidence, and anticipated ECB rate cuts. In China, positive sentiment is supported by government stimulus efforts and signs of stabilisation in the property sector. With equities in both regions undervalued relative to the US, investors are looking to capitalise on these opportunities to enhance portfolio resilience.”
Recession now seen as top risk by investors
The latest Retail Investor Beat reveals that more than a quarter (26%) of retail investors now view the state of the global economy and a potential recession as the biggest threat to their investments, up from 18% a year ago. In contrast, inflation – the top concern a year ago – now ranks second at 19%, marking a significant reordering of investor fears.
Generational analysis shows that Gen X and Baby Boomers are the most concerned about a potential recession (30% each), while Gen Z and Millennials still view inflation as the primary risk (23% each).
Commenting on the data, eToro’s Global Market Strategist Lale Akoner, said: “Given the magnitude of market fluctuations in the first few months of 2025, it is not surprising that investors are increasingly wary of the global macroeconomic situation. This market turbulence, combined with ongoing ambiguity around future international trade dynamics, is shaping what retail investors perceive as risk. With shorter investment horizons, older generations of investors have less time to recover from losses, so market uncertainty hits their sense of financial security harder.”
ENDS
Notes to editors
About this report
The latest Retail Investor Beat was based on a survey of 10,000 retail investors across 12 countries and 3 continents. The following countries had 1,000 respondents: UK, US, Germany, France, Australia, Italy and Spain. The following countries had 600 respondents: Netherlands, Denmark, Poland, Romania, and the Czech Republic.
The survey was conducted from 14 – 18 May and carried out by research company Opinium. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.
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