This year has been marked by heightened volatility, with investors navigating persistent uncertainty since its start. The CBOE Volatility Index, which reflects market expectations of near-term volatility conveyed by S&P 500 Index option prices, has surged nearly 44% year to date, underscoring the turbulent backdrop.

The Middle East conflict has reinforced investor preference for safe-haven assets, with ongoing volatility reinforcing the case for greater exposure to gold. Amid ongoing economic and geopolitical instability, gold continues to offer investors an effective hedge against elevated macro risks.

According to TradingView, gold price is up about 9.93% year to date, reflecting strong safe-haven demand this year. However, the same conflict has driven a surge in oil prices and energy-led inflation concerns have delayed expectations of Fed rate cuts and supported the U.S. dollar, limiting further upside for the yellow metal. The price of the precious metal has fallen about 7.47% over the past month.

Gold, traditionally viewed as an inflation hedge, tends to gain appeal amid rising price pressure. However, elevated energy costs also increase the likelihood of a prolonged higher-rate environment, posing a key headwind for non-yielding gold.

Ceasefire Hopes Offer Temporary Market Relief

On Wednesday, gold touched a near three-week high following the news of Washington and Tehran agreeing to a temporary truce, helping to ease inflation concerns tied to energy markets. However, recent ceasefire developments reversed gains after Iran’s parliament speaker signaled that the temporary truce with the United States had been breached, as per Yahoo Finance.

According to Pepperstone Group strategist Ahmad Assiri, the ceasefire provides temporary relief, though it remains dependent on evolving conditions, as quoted on the abovementioned Yahoo Finance. Any positive developments around the ceasefire could trigger a renewed upswing in gold prices.

However, per James Luke of Schroder Investment Management Ltd, as quoted on another Yahoo Finance article, gold is likely to gradually trend higher, even if the crisis persists. Luke expects ongoing support from the debasement trade driven by fiscal concerns and dollar-hedging demand.

Geopolitical Uncertainty Keeps Safe-Haven Demand Alive

While a sustained ceasefire and constructive diplomacy may ease immediate risks, underlying geopolitical tensions are expected to persist, providing continued support to gold through elevated safe-haven demand.

According to President Trump, U.S. military forces are expected to remain deployed around Iran until the agreement is achieved, with any breach likely to invite a stronger military response, as quoted on CNBC. Trump also struck a firm tone, stating that the American military is “loading up and resting, looking forward, actually, to its next conquest,” as quoted on the abovementioned CNBC article.

Rising geopolitical tensions are further reflected in earlier comments by President Trump on Cuba and Greenland, highlighting the broader strains impacting the global economy.

Central Bank Demand Keeps Gold Well Supported

According to MSN, central bank demand continues to underpin gold prices, helping the metal hold key long-term support levels despite recent volatility. As per data by the Kobeissi Letter, as quoted on the MSN article, global central banks added 19 tonnes of gold in February, extending their net buying streak to 23 months and highlighting resilient institutional demand.

Steady buying by major economies continues to anchor gold prices, helping limit downside even during sharp pullbacks. Central bank demand is set to remain a key pillar supporting gold’s long-term outlook.

Gold ETFs: Short-Term Pressure, Long-Term Opportunity

Elevated energy costs further increase the likelihood of prolonged higher interest rates, posing a key headwind for non-yielding gold. While the near-term outlook may appear uncertain, the long-term case for the metal remains intact. The recent pullback in prices could present a compelling entry point for investors.

The precious metal continues to serve as an important hedge for investors across different investment themes, especially as elevated volatility persists. Investors should not be discouraged by any near-term pullbacks in gold prices. Instead, such dips may offer opportunities to gradually build exposure to the metal through gold ETFs using a buy-the-dip approach.

In the current market backdrop, a long-term passive approach stands out as a strategy that can help investors remain resilient amid short-term market volatility, with gold emerging as an attractive portfolio allocation.

Gold ETF That Investors May Want to Watch

Below, we have highlighted a few funds in which investors can increase their allocation to gain greater exposure to gold.

Investors can consider SPDR Gold Shares (GLD Quick QuoteGLD - Free Report) , iShares Gold Trust (IAU Quick QuoteIAU - Free Report) , SPDR Gold MiniShares Trust (GLDM Quick QuoteGLDM - Free Report) and iShares Gold Trust Micro (IAUM Quick QuoteIAUM - Free Report) to increase their exposure to the yellow metal.

Gold Miner ETFs to Keep on the Radar

These ETFs focus on gold miners, usually magnifying gold’s gains and losses. They provide access to the gold mining industry, not the commodity’s price.

Investors can consider VanEck Gold Miners ETF (GDX Quick QuoteGDX - Free Report) , Sprott Gold Miners ETF (SGDM Quick QuoteSGDM - Free Report) and Sprott Junior Gold Miners ETF (SGDJ Quick QuoteSGDJ - Free Report) .