What's Driving Precious Metal ETFs Rally in 2025?

Gold prices rose then fell after weak US jobs data, which lowered bond yields and the Dollar. Despite high yields, gold demand remains strong, with inflows into gold ETFs like GLD and IAU. Gold spot price reached $4216/oz before retracing. US nonfarm payrolls missed expectations, reducing Fed rate hike odds.

Gold has risen 17% over the past year, but faces pressure from higher interest rates after the Fed's 25 basis point hike. SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) provide exposure to physical gold. Despite higher yields, gold ETF demand remains strong, with August seeing significant inflows. GLD and IAU have similar one-year returns and assets under management. Future volatility depends on Fed policy, inflation, and the US dollar.

BlackRock's IBIT bitcoin ETF saw a 5.8-5.9% daily gain, surpassing the GLD gold ETF in trading volume and gains. IBIT recorded $1.56B in turnover, ranking fifth in ETF market turnover, while GLD had $907.64M and ranked ninth. Analysts noted the shift in fund flows between the two asset classes.

The Federal Reserve raised interest rates by 0.25% to 3.75%-4.00%, its first increase since 2023. The Fed expects rates to reach 4.1% by year-end 2026. Gold prices, tracked by SPDR Gold Shares (GLD), initially fell after the announcement. Equities and Bitcoin showed mixed reactions.

Saudi Arabia's oil production fell 23% in August, pushing Brent crude above $100/barrel. U.S. PPI rose 5.4% YoY, with energy prices up 4.2%. Fed rate hike odds increased to 71%. Defensive ETFs like XLE, TIP, SGOV, XLP, and GLD are highlighted for investors.

U.S. producer prices rose 5.4% year-over-year in August, exceeding expectations and accelerating from July, according to Labor Department data. The increase was driven by energy costs, particularly diesel fuel. Fed futures now price a 66% chance of a rate hike at the next meeting. Gold, tracked by SPDR Gold Shares (GLD), fell 1.1% to $4,340 an ounce.