(Reuters) -Outsized flows into exchange-traded funds tracking gold have helped drive a spectacular rally that pushed bullion to record highs over the last month, analysts said.

Spot gold prices hit another record of $3,990.85 per ounce on Tuesday, while  U.S. gold futures for December delivery edged above the $4,000 an ounce milestone. Some analysts cited the record pace at which investors are allocating money to the metal via ETFs. 

Many investors have grown wary of sky-high stock market valuations and they view gold as a safe haven providing refuge from uncertain economic policy and geopolitics. Bullion prices are 51% higher this year, the largest surge since 1979, according to LSEG data. 

"Institutional investor interest is just getting started," said Roukaya Ibrahim, commodities strategist at BCA Research, who calculated that assets in gold ETFs globally now account for 2.6%, up from 1.9% a year ago.

The intensity of investor interest is unprecedented, said Ibrahim, adding that clients now keep her on the phone for as long as 90 minutes at a time to chat about market movements.

State Street Investment Management said inflows into U.S. ETFs such as the firm's own SPDR Gold Shares ( GLD ) have set all-time records of $35 billion as of the end of September, ahead of the previous full-year record of $29 billion, set in 2020.

Globally, inflows into gold ETFs hit $64 billion year-to-date, according to data from the World Gold Council, with a record $17.3 billion in September alone. 

That is a dramatic reversal from recent trends: over the last four years, gold ETFs have seen outflows totaling $23 billion, the World Gold Council calculated.

Analysts said investors believe gold can hold its value in the face of economic policy headwinds and rising geopolitical tensions. They also hope gold can cushion big gains they may have seen this year as the artificial intelligence boom sent stocks soaring.

"There's a kind of 'barbelling' here, where gold becomes a hedge against any failure of the AI-driven tech boom to deliver on its promises and the policy implications of a crash," said Thierry Wizman, global FX and rates strategist at Macquarie Group.

Gold, one of the world's oldest financial assets, is making its way higher in tandem with one of its newest, bitcoin, said David Schlesser, head of multi-asset solutions at VanEck.

"Both are  decentralized store of value assets not tied to any government," said Schlesser. 

Schlesser warns that "no asset goes up in a straight line and we should expect some tactical pullbacks and volatility," adding that in this case, "volatility is your friend," giving investors and traders a chance to jump in on dips. He expects gold prices to top $5,000 an ounce in 2026 and urges investors to allocate at least 5% of their portfolio to gold.

Goldman Sachs ( GS ) said in a note published on Monday that it expects holdings of gold ETFs in North America and Europe to rise still further as the Federal Reserve cuts U.S. interest rates into 2026. Mike Wilson, chief investment officer at Morgan Stanley ( MS ) suggested last month that a 20% allocation to gold serves as a resilient inflation hedge. 

"When you have establishment names like Morgan Stanley ( MS ) telling investors that they don't own enough gold, it's no surprise to see inflows jump, whether into ETFs or vaulted bullion,"  said Adrian Ash, head of research at online marketplace BullionVault.