Why Gold ETFs Are Poised to Outperform in 2025 After 26% Rally

Gold delivered its strongest performance in over a decade during 2024, climbing more than 26%, and momentum appears set to continue into 2025. Multiple tailwinds—persistent geopolitical risks, aggressive central bank accumulation, and a shifting monetary policy environment—are all converging to support further upside for the precious metal.

For investors seeking gold exposure, the challenge isn’t finding opportunities, but rather choosing among them. Physical gold-backed ETFs have emerged as the most straightforward vehicles to participate in the metal’s ascent, offering direct correlation to spot prices without the complexity of futures trading.

The Investment Case for Gold ETFs in 2025

Geopolitical and Economic Foundations

Ongoing tensions between major powers continue to reinforce gold’s role as a crisis insurance policy. When markets face political or financial turbulence, investors historically rotate into gold to preserve capital. This safe-haven premium should persist throughout 2025.

The Rate-Cut Tailwind

After maintaining interest rates at 23-year highs for 14 consecutive months starting in July 2023, the Federal Reserve pivoted sharply in September with a 50-basis-point cut. Two additional 25-basis-point reductions followed in subsequent months, with the Fed projecting two more cuts in 2025. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making the metal more attractive relative to fixed-income alternatives such as bonds.

Inflation Hedge Appeal

With incoming administration policies expected to drive fiscal expansion, inflation concerns loom on the horizon. Gold’s historical role as an inflation hedge makes it particularly compelling in this environment. Central banks worldwide—particularly in emerging powerhouses like India and China—are accelerating purchases, providing steady underlying demand that extends beyond speculative interest.

Five Top Gold ETF Vehicles Compared

All five leading physically-backed gold ETFs rallied approximately 27% in 2024 and carry identical Zacks ETF Rank #3 (Hold) ratings:

Lowest-Cost Option: iShares Gold Trust Micro (IAUM) This emerging fund boasts the market’s lowest expense ratio at just 0.09% annually. With $1.4 billion in assets under management and average daily trading volume near 2.7 million shares, it offers minimal fee drag for cost-conscious investors.

Ultra-Liquid Choice: SPDR Gold Trust ETF (GLD) The category’s heavyweight features $73.2 billion in AUM—substantially larger than competitors—backed by physical bullion held under HSBC custody in London. Daily volume exceeds 6 million shares, ensuring minimal slippage on entry and exit. Annual fees run 40 basis points.

Best Fee-to-Scale Balance: iShares Gold Trust (IAU) Trading 5 million shares daily, this JPMorgan-custodied fund manages $33 billion and charges 25 basis points annually, representing a middle ground between cost and convenience.

Value-Oriented Alternative: SPDR Gold MiniShares Trust (GLDM) Charging just 10 basis points annually, this State Street product serves as a low-cost sibling to GLD. With $9.2 billion in assets and 3 million daily share trades, it delivers institutional-grade liquidity at budget pricing. Physical gold sits with ICBC Standard Bank and JPMorgan Chase.

Vault-Based Solution: abrdn Physical Gold Shares ETF (SGOL) This option stores allocated bullion bars in secure London vaults and charges 17 basis points annually. At $3.7 billion in AUM with 4 million daily shares traded, it combines security-focused infrastructure with reasonable costs.

Selecting Your Entry Point

The choice between these vehicles ultimately hinges on individual priorities: expense-conscious investors may gravitate toward IAUM or GLDM, while those prioritizing liquidity and familiarity should consider GLD or IAU. With gold ETF returns tracking the metal’s fundamentals closely, the decision becomes less about which fund performs best and more about which fits your cost structure and trading patterns.

The combination of supportive macro conditions, persistent safe-haven demand, and central bank buying suggests 2025 could rival or exceed 2024’s impressive gains for gold ETF investors.