Gold Breaks $3,600 as ETFs in Europe Shine

Gold’s record-breaking run showed no signs of slowing this week, with the metal smashing through $3,600 an ounce for the first time in history. Already up 36% year-to-date, more than triple the S&P 500’s return, gold remains the standout asset of 2025. Key forces have driven the rally, all tied to investors’ search for safe havens.

Why Gold Keeps Climbing

Geopolitical tensions are one accelerant. President Trump’s efforts to broker peace between Russia and Ukraine have involved steep tariffs on Russia’s key trading partners and warnings of secondary sanctions. Meanwhile, trade negotiations with China remain fragile. If talks stall or conflict lingers, the safe-haven premium on gold could expand further.

Finally, concerns about the U.S. economy are providing an underlying bid. Despite a strong second-quarter GDP, cracks are forming in the labor market. The unemployment rate ticked up to 4.4% in July, the highest since late 2021, while job growth fell short of expectations and earlier months saw downward revisions. Combined with stubborn inflation pressures, investors fear a stagflation scenario: high prices and slowing growth. That leaves the Federal Reserve with fewer options other than cutting rates. With rate cuts constrained by inflation risk, gold’s appeal as a hedge against policy uncertainty has only strengthened.

Finally, global central banks, led by China, are aggressively diversifying their reserves away from the US dollar and into gold, a movement driven by mounting geopolitical risks and concerns over the dollar's long-term stability. According to analysts, this demand, which has quintupled since the Ukraine war began, is expected to provide ongoing support for the price of gold. Illustrating this trend, a June ECB report noted gold had become the world's second-largest reserve asset, surpassing the euro.

Wall Street forecasters are leaning bullish: Goldman Sachs projects gold could hit $4,000 by mid-2026 and even $5,000 if Treasury allocations shift meaningfully into bullion.

European Gold ETFs Ride the Wave

Investors haven’t just been buying gold bars. European gold ETFs are capturing strong inflows, underscoring the metal’s global momentum.

The iShares Physical Gold ETC (IGLN) led the charge, rising 4.5% with €422 million in inflows, now managing over €23 billion. The Amundi Physical Gold ETC (GOLD) delivered the week’s strongest performance at +5.2%, while Invesco Physical Gold (SGLD) and Xetra-Gold (4GLD) posted gains of 3.7% and 3.8%, respectively, with steady allocations.

Even smaller funds showed resilience. The UBS Gold ETF (AUUSI) climbed 4.5%, adding €17 million in inflows, while WisdomTree’s SGBS gained by the same margin. Outflows from select funds like Xtrackers IE Physical Gold (XGDU) suggest some profit-taking, but the broader trend remains decisively positive.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.