Gold reached a milestone by topping $3,000 per ounce for the first time. The economic uncertainties triggered by U.S. President Donald Trump's trade tariff war have led to a safe haven demand. With the record bullion prices, ETFs linked to the spot gold price or futures also reached all-time highs.
Some of these include SPDR Gold Trust ETF GLD, iShares Gold Trust IAU, SPDR Gold MiniShares Trust GLDM, abrdn Physical Gold Shares ETF SGOL, iShares Gold Trust Micro IAUM, Vaneck Merk Gold ETF OUNZ and GraniteShares Gold Trust BAR. All these funds are popular options and have a Zacks ETF Rank #3 (Hold) each. These have risen nearly 14% each since the start of 2025.
Inside the Gold Rally
Gold has been on the rise since the start of the year. It gained strong momentum in recent weeks as the economic uncertainty intensified and the stock market experienced a sharp pullback. The S&P 500 officially entered correction territory, sliding 10% from its high set on Feb. 19 in just 16 trading sessions. This marks the seventh-fastest correction since 1929, according to Bloomberg (read: Wall Street in Correction: Tap High-Income ETFs).
Trump’s trade policies are expected to harm the economy and profitability of companies, worsening fears of an economic slowdown. Meanwhile, the barrage of recent data related to surveys and sentiment indicators point to a downturn in the economy. Many Wall Street analysts have raised concerns about stagflation, wherein growth stagnates, inflation remains high and unemployment rises.
Gold is often used to preserve wealth during financial and political uncertainty, and usually does well when other asset classes struggle. Additionally, the inflationary pressure caused by new tariffs will benefit the precious metal's status as a hedge against rising prices.
Traders are now pricing in the possibility that the Fed will cut interest rates several times this year amid a tariff-driven U.S. economic slowdown, signs of a cooling labor market and softer inflation. Lower interest rates will continue to support gold prices as these raise the yellow metal’s attractiveness compared with fixed-income assets such as bonds. Notably, gold is highly sensitive to rising U.S. interest rates, as these increase opportunity costs of holding non-yielding bullion.
Apart from these, central banks are among the major drivers of gold prices. The banks are dominant buyers of gold as they seek to diversify their reserves away from the U.S. dollar. In particular, China extended its purchases for a fourth consecutive month in February. According to the latest report from the World Gold Council, global gold demand reached a record high in 2024, driven by sustained central bank buying and growth in investment demand. Central banks accumulated more than 1,000 tons of gold for the third consecutive year. Global investment demand increased 25% year over year.
Massive Inflows in Gold ETFs
Gold ETFs pulled in nearly $8 billion in capital since the start of 2025, per etf.com. GLD and IAU alone attracted $3.3 billion and $2.6 billion, respectively. The cheapest funds (by expense ratio) — GLDM and IAUM gathered $1.3 billion and $311 million, respectively. SGOL, OUNZ and BAR saw inflows of $228.4 million, $91.3 million and $42.1 million, respectively (read: Gold Mining ETFs Shine Amid Market Rout).
Bottom Line
With economic uncertainty showing no signs of abating, investor interest in gold ETFs is likely to remain strong in the months ahead.
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Get it free >>SPDR Gold Shares (GLD): ETF Research Reports
iShares Gold Trust (IAU): ETF Research Reports
abrdn Physical Gold Shares ETF (SGOL): ETF Research Reports
SPDR Gold MiniShares Trust (GLDM): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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