Gold ETFs Shine as Middle East Tensions Stoke Safe-Haven Demand

The Middle East, already marked by a fragile and complex geopolitical backdrop, saw tensions escalate on Saturday as the United States and Israel carried out strikes on Iran. This intensified global market volatility and drove investors toward safe-haven assets, strengthening the case for higher portfolio exposure to gold.

A traditional safe-haven during periods of uncertainty, gold continues to stand out amid economic and geopolitical instability. Its defensive appeal remains intact, offering investors a crucial hedge against rising macroeconomic and geopolitical risks.

According to TradingView, gold price is up about 2% over the past day and about 4.84% over the past five days, reflecting strong safe-haven demand. The yellow metal is up 52.41% over the past six months and 87.17% over the past year.

Iran retaliated with wide-scale attacks on United States allies and assets across the Persian Gulf. According to the BBC, several Gulf states, including Qatar, Bahrain, Jordan and Kuwait, reported intercepting missiles aimed at U.S.-linked targets. Oman, the United Arab Emirates and Saudi Arabia were also hit.

The CBOE Volatility Index, which reflects market expectations of near-term volatility conveyed by S&P 500 Index option prices, has risen 21% since Feb. 27, extending this year’s volatility surge and lifting its 2026 gain to 56%.

What Lies Ahead for the Yellow Metal?

According to Yahoo Finance, analysts at JPMorgan expect gold prices to see a near-term risk premium increase of 5% to 10% following the recent geopolitical tension in the Middle East.

While short-term volatility is likely, the bank believes sustained demand from central banks and investors could potentially lift gold prices to $6,300 per ounce by this year’s end. If the conflict drags on, higher oil prices and rising fiscal pressure could strengthen the longer-term case for gold, per JPMorgan analysts.

Building Gold Exposure With ETFs

Given the increasing macroeconomic uncertainty and geopolitical volatility, gold remains an essential hedge for all investors, regardless of their investment theme.

According to analysts at JPMorgan, as quoted on the abovementioned Yahoo Finance article, while geopolitical shocks can trigger rapid price gains, such moves are often fragile and may unwind if conflicts de-escalate or broader market stress drives forced selling.

However, investors should not be discouraged by any near-term pullback in gold prices. Instead, they should adopt a "buy-the-dip" strategy to build exposure through gold ETFs.

Physical Gold ETFs

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.

With a one-month average trading volume of 23.31 million shares, GLD is the most liquid option, ideal for active trading strategies. However, implementing an active strategy in the current landscape may not be the most effective approach. Adopting a long-term passive investment strategy becomes the go-to approach for investors to weather short-term market storms.

GLD has gathered an asset base of $183.21 billion, the largest among the other options. Regarding annual fees, GLDM and IAUM are the cheapest options, charging 0.10% and 0.09% respectively, which makes them more suitable for long-term investing.

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.

With a one-month average trading volume of 31.65 million shares, GDX is the most liquid option. GDX has gathered an asset base of $35.11 billion, the largest among the other options. Regarding annual fees, SGDM and SGDJ are the cheapest options, charging 0.50%.

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

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