Gold ETFs Glitter Amid Renewed Transatlantic Trade Strains

January has already seen a fair share of market volatility, underscoring the year’s turbulent start and potentially setting the tone for what lies ahead in the months to come, while strengthening the case for increased portfolio exposure to gold. President Trump’s recent announcement of tariffs on eight European nations has made matters worse for an already volatile market environment.

Since last Monday, the CBOE Volatility Index has surged about 27% and is up roughly 31% since the start of 2026, reflecting the heightened volatility and uncertainty markets have been navigating since the start of the year.This backdrop is likely driving investors toward safe-haven assets. Gold’s enduring safe-haven status remains firmly intact, offering a crucial hedge against rising macroeconomic and geopolitical risks.

Gold’s strong rally from 2025 appears to be extending into 2026, with prices up 44.61% over the past six months and 79.93% over the past year.

Additionally, the upside case for gold remains intact, underpinned by solid fundamentals and a constructive long-term outlook. Increasing central bank buying, ongoing economic uncertainty, expectations of further Fed rate cuts this year and a softer dollar are reinforcing the case for greater exposure to gold.

Transatlantic Trade War Rhetoric Returns

President Trump’s escalating push to acquire Greenland and the resulting opposition from European economies have raised the risk of a renewed transatlantic trade war. This escalation further complicates an already fragile geopolitical landscape, boosting risk aversion and fueling demand for safe-haven assets, while carrying significant economic and political implications for U.S.–Europe relations.

According to Trump’s latest comments on Saturday, per Fortune and as quoted on Yahoo Finance, Denmark, France, Germany, Norway, Sweden, the United Kingdom, Finland and the Netherlands will face a 10% tariff starting Feb. 1, with the same eventually rising to 25% on June 1 unless a deal is reached for the complete purchase of Greenland.

European leaders are now weighing possible countermeasures, including retaliatory tariffs on up to $108 billion worth of U.S. goods, according to another Yahoo Finance article. Additionally, as reported by Bloomberg and quoted in the abovementioned Yahoo Finance article, President of France Emmanuel Macron may seek to activate the European Union’s anti-coercion instrument, the bloc’s strongest trade retaliation mechanism.

Why Gold’s Appeal Extends Beyond Trade Tensions

In addition to renewed transatlantic trade war tensions, geopolitical tensions have accounted for the bulk of market volatility so far in 2026. U.S. military actions in Syria and Venezuela and tensions in the Middle East and Asia’s major flashpoints keep gold’s safe-haven appeal intact.

According to LSEG Lipper data, as quoted on Reuters, in the week ending Jan. 14, gold and precious metals commodity funds recorded net inflows of $1.81 billion, marking the ninth week of net purchases in the past 10 weeks.

Additionally, a weaker U.S. dollar generally leads to higher demand for gold, pushing its price upward as it becomes more affordable for buyers holding other currencies. Per TradingView, the U.S. Dollar Index (DXY) has fallen 0.75% over the past five days and 8.67% over the past year. The index has recorded an all-time decline of 17.75%.

Anticipation of more Fed rate cuts in 2026 is another key tailwind for the yellow metal. The greenback's value tends to move inversely with interest rate adjustments by the Fed, making the dollar weaker and less attractive to foreign investors. Expected rate cuts and a weaker dollar should continue to support the upward trend in gold.

According to another Reuters article, gold received additional support as the Supreme Court is scheduled to review a case this week related to President Trump’s attempt to remove Fed Governor Lisa Cook, reviving concerns over the Fed’s independence. This comes on top of already lingering tensions between President Trump and Fed Chair Jerome Powell.

Building Gold Exposure With ETFs

In the current market environment, repeated bouts of volatility can undermine the effectiveness of active strategies, reinforcing the case for a long-term, passive approach. Such an approach allows investors to remain resilient through market disruptions.

With fundamentals remaining supportive and expectations of elevated volatility ahead in the year, the argument for increasing portfolio exposure to the yellow metal continues to strengthen. Below, we have highlighted a few funds in which investors can increase their allocation to gain greater exposure to gold.

Investors can consider SPDR Gold Shares GLD, iShares Gold Trust IAU, SPDR Gold MiniShares Trust GLDM, abrdn Physical Gold Shares ETF SGOL and iShares Gold Trust Micro IAUM to increase their exposure to the yellow metal.

Gold Miners ETFs

These ETFs focus on gold miners, usually magnifying gold’s gains and losses. They provide access to the gold mining industry, not the commodity’s price. Investors can consider VanEck Gold Miners ETF GDX, Sprott Gold Miners ETF SGDM, VanEck Junior Gold Miners ETF GDXJ and Sprott Junior Gold Miners ETF SGDJ.

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This article originally published on Zacks Investment Research (zacks.com).

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