Gold remains a vital part of investor portfolios, as diversification needs and tariff-driven uncertainty push investors toward safe-haven assets. Central banks’ increasing purchases of the precious metal have also boosted gold prices.

Despite gradually easing geopolitical tensions, rising uncertainty from President Trump's tariffs continues to fuel global market volatility, making investors risk-averse and increasing demand for safe-haven assets. Markets forecast gold prices to end 2025 above the $3,000 per ounce mark.

Here are a few key reasons why investing in gold ETFs could be a smart move.

Gold Offers a Safe Haven With Tech Overload

Investing heavily in the technology sector to capitalize on AI’s growth potential, comes with increased concentration risk, exposing portfolios to major losses from market-driven panic sell-offs. This was highlighted when nearly $1 trillion in market cap was wiped out as traders fled the tech sector amid panic over a new AI app from a Chinese startup, in late January.

However, the tech sector and its major players quickly rebounded, signaling that the market's sell-off was likely an overreaction. This incident underscores the concentration risk in investor portfolios and the potential dangers of momentum investing in the current volatile landscape. Reliance on a few select names makes the market vulnerable to sharp drawdowns, underscoring the need for diversification as a crucial strategy.

With increasing AI advancements, the risk of market disruptions grows, increasing the likelihood of a further correction in the U.S. stock market. This makes maintaining gold exposure a crucial investment strategy to diversify away from technology.

Trump’s Policies Make Gold a Safe Bet

According to Goldman Sachs, as quoted on Reuters, apprehensions of a trade war, ignited by President Donald Trump’s aggressive trade policy plans, could be one of the key drivers of the yellow metal’s recent rally. Per the investment bank, if policy uncertainty continues, especially tariff concerns, long-term speculative positioning could drive gold prices as high as $3,300 per ounce by this year’s end.

Morgan Stanley shares a similar view, forecasting gold price to cross the $3,000 mark in the near term, as quoted on Reuters. According to Jim Wyckoff, a senior market analyst at Kitco Metals, as also quoted on Reuters, markets are observing increased demand for safe-haven assets driven by growing uncertainty over President Trump's tariff plans.

Trump recently announced plans to impose auto tariffs of around 25%, along with similar duties on semiconductor and pharmaceutical imports, escalating trade tensions and adding to global economic uncertainty, according to Yahoo Finance. Investors should brace for more turbulence ahead, with the volatility surrounding new policies expected to stay.

Recent unfavorable inflation data and expectations of tariffs have put upward pressure on price levels. Consequently, increasing exposure to gold would be a smart move. Across extended investment periods, gold preserves its purchasing power, outpacing inflation and diversifying an investment portfolio due to its historical tendency to have a negative correlation with other asset classes.

Central Banks Fuel Gold’s Price Surge

Goldman Sachs has revised its year-end 2025 forecast, now predicting gold to reach $3,100 per ounce, up from $2,890, pointing toward strong and sustained central bank demand for the safe-haven asset.

Goldman Sachs projects that sustained central bank buying could drive prices up 9% by the year-end. The investment bank also raised its central bank demand forecast to 50 tons per month from its previous estimate of 41 tons.

According to Giovanni Staunovo, an analyst at UBS, gold is expected to climb to $3,000, driven by continued upside potential and sustained central bank demand, as quoted on Reuters. Citi also raised its short-term estimates for gold price from $2,800 to $3,000 per ounce, according to Reuters.

ETFs to Consider

Investors can enhance their exposure to the precious metal, to potentially boost portfolio gains and better prepare for an uncertain market environment going forward.

Investors should not be discouraged by any likely decline in gold prices. Rather, they should adopt a "buy-the-dip" strategy. Given the increasing possibility of a trade war driven by reciprocal tariffs, gold remains an essential hedge for all investors, regardless of their investment theme.

SPDR Gold Shares (GLD Quick QuoteGLD - Free Report)

SPDR Gold Shares has amassed an asset base of $80.88 billion and charges an annual fee of 0.4%. It has a three-month average trading volume of 6.99 million shares.

SPDR Gold Shares has gained 7.67% over the past month and 36.42% over the past year.

iShares Gold Trust (IAU Quick QuoteIAU - Free Report)

iShares Gold Trust has amassed an asset base of $36.99 billion and charges an annual fee of 0.25%. It has a three-month average trading volume of 5.18 million shares.

iShares Gold Trust has gained 7.68% over the past month and 36.62% over the past year.

SPDR Gold MiniShares Trust (GLDM Quick QuoteGLDM - Free Report)

SPDR Gold MiniShares Trust has amassed an asset base of $10.55 billion and charges an annual fee of 0.10%. It has a three-month average trading volume of 2.56 million shares.

SPDR Gold MiniShares Trust has gained 7.70% over the past month and 36.82% over the past year.

abrdn Physical Gold Shares ETF (SGOL Quick QuoteSGOL - Free Report)

abrdn Physical Gold Shares ETF has amassed an asset base of $4.18 billion and charges an annual fee of 0.17%. It has a three-month average trading volume of 4.38 million shares.

abrdn Physical Gold Shares ETF has gained 7.69% over the past month and 36.72% over the past year.

Goldman Sachs Physical Gold ETF (AAAU Quick QuoteAAAU - Free Report)

Goldman Sachs Physical Gold ETF has amassed an asset base of $1.06 billion and charges an annual fee of 0.18%. It has a three-month average trading volume of 1.99 million shares.

Goldman Sachs Physical Gold ETF has gained 7.71% over the past month and 36.74% over the past year.