Bullion Boom: Gold ETFs Gain As Geopolitical Storm Fuels Surge

Gold climbed to fresh highs early on Feb. 20 as investors flocked to the ultimate safe-haven asset amid rising geopolitical tensions and economic uncertainty.

Spot bullion hit a new record of $2,954.84 an ounce earlier on Thursday before paring some of its gains. Amidst this surge, ETFs tied to gold are gaining traction, offering investors a way to capitalize on the yellow metal's bullish momentum.

The optimism around gold has sent several ETFs soaring, with the WisdomTree Efficient Gold Plus Gold Miners Strategy Fund GDMN leading the charge. The ETF has gained over 25% in the past month. While such a sharp rise might give some investors pause, many analysts believe the rally still has legs.

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Nigel Green, CEO of deVere Group, sees the revaluation of US gold reserves as a potential disruptor. ETF Trends quoted him stating that "re-marking gold to its real market value could be a transformative financial event." This is particularly relevant for investors considering GDMN, which not only provides exposure to gold futures but also includes shares of mining companies—an asset class highly correlated to spot gold prices.

SPDR Gold Shares GLD is another ETF that one might keep an eye on. As the largest physically backed gold ETF, GLD provides direct exposure to gold prices. Given the current macroeconomic uncertainty and strong central bank buying, GLD remains a go-to option for investors seeking a straightforward way to participate in the metal’s price movements.

Another on the list is VanEck Gold Miners ETF GDX, which focuses on gold mining companies that tend to have leveraged exposure to gold prices. If the rally continues, gold miners could see substantial profit boosts, making GDX an attractive pick for those looking for amplified gains beyond spot gold.

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What’s Fueling The Rally?

Broader geopolitical concerns are playing a major role in the metal's ascent. Uncertainty over Trump's stance on Ukraine are making investors jittery. The US President recently suggested that Ukrainian President Volodymyr Zelenskiy should move swiftly toward a peace deal with Russia, warning that "he is not going to have a country left" otherwise. With mounting fears that Washington could withdraw its support for Ukraine, traders are looking to gold as a hedge against geopolitical instability.

Gold's rise has been further fueled by Trump's disruptive trade policies, which continue to send shockwaves through global markets. According to Bloomberg, Goldman Sachs raised its year-end gold target to $3,100 an ounce, citing stronger-than-expected central bank buying as a key driver.

Meanwhile, escalating trade frictions between the US and Europe in the backdrop of Trump's tariff threats are affecting the global gold market. The resulting price surge in New York has triggered a rush to transport bullion from London across the Atlantic. In one of the largest physical gold movements in years, major banks like JPMorgan Chase and HSBC are capitalizing on the price differential, flying gold from Swiss refineries and London vaults to the US. The Wall Street Journal reported that JPMorgan alone is set to deliver $4 billion worth of gold this month, to grab the arbitrage opportunity created by regional pricing disparities.

Adding to the intrigue, US Treasury Secretary Scott Bessent sought to quash speculation that the government might revalue its bullion holdings, stating that such a move is "not what I had in mind" when discussing plans for a sovereign wealth fund. Bessent confirmed that he has no plans to visit Fort Knox, the secure facility that houses much of the US gold reserve, stating that "all the gold is there" and that any senator is welcome to verify it. Trump, on his part, has emphasized his administration's commitment to ensuring that these reserves are properly accounted for.

China is another major factor in the mix that investors should monitor. Beyond the People's Bank of China's aggressive bullion purchases, Beijing recently approved a policy allowing insurance companies to invest in gold. Nigel Green said that this move is expected to unleash billions of dollars in fresh demand, further stoking the rally, according to ETF Trends.

With central banks continuing to amass gold at a historic pace, trade tensions disrupting global supply chains, and geopolitical risks mounting, gold's rally appears far from over. And for investors looking to capitalize on this momentum, ETFs like GDMN, GLD and GDX could be a ‘golden’ opportunity.

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