Gold has jumped above $3,500 per ounce this week, setting new records and solidifying its status as 2025’s top commodity. What’s changed this time is not the magnitude of the rally but what’s driving it.
GLD ETF is looking shiny amid the political and geopolitical drama. Check its real-time prices.
For the first time since 1996, the collective holdings of global central banks in gold exceeded U.S. Treasurys, based on Bloomberg numbers gathered by Crescat Capital. That’s a stealthy but historic rebalancing away from U.S. government bonds, the traditional go-to safe asset. This indicates that even sovereigns are hedging against risks from Washington’s growing budget deficit to a political tug-of-war over the independence of the Federal Reserve.
Here in the U.S., that tug-of-war has become a drama unto itself. President Trump has openly gone after the Fed, challenged the validity of rate policy, and is set to replace Chair Jerome Powell when his term expires in May of 2026. Investors are preparing for a dovish shift, with markets already pricing a 25-basis-point reduction in rates this month and speculating about an even larger cut if labor market figures weaken further. The lower rates make yield-holding assets less attractive, strengthening the argument for non-yielding bullion.
Under these conditions, ETFs are absorbing demand. SPDR Gold Shares (NYSE:GLD) and iShares Gold Trust (NYSE:IAU), the two biggest gold-backed ETFs, have experienced consistent gains as investors follow the lead of central banks in their portfolios. Both funds have increased by more than 5% in the past five days.
Last week, GLD led inflows of all U.S.-listed ETFs, pulling in $2.3 billion, according to data cited by Etf.com, as gold prices flirted with record highs near $3,500. Investors sought safety after Trump attempted to oust Federal Reserve Governor Lisa Cook.
Interestingly, silver ETFs are also staging a quiet rally of their own: iShares Silver Trust (NYSE:SLV) and Aberdeen Standard Physical Silver Shares (NYSE:SIVR) have gained 9.8% each in the past month. Silver prices are higher by about 43% this year, sustained not just by haven demand but also by its use in clean-energy applications such as solar panels. Continued tightness in physical markets has driven lease rates, the price of borrowing metal, far above historical levels, per a Bloomberg report.
If sovereigns are reversing their vaults and institutional and retail investors are following the same trade, precious-metals ETFs might be poised for a structural change, from tactical hedges to core portfolio holdings. It appears the safety net of the world is being recrafted, one ETF inflow at a time.
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