Micro Gold ETF Surges as Rate Cut Expectations Mount

Market attention is turning toward the iShares® Gold Trust Micro (IAUM) as it demonstrates remarkable upward momentum. This exchange-traded fund, which provides exposure to physical gold, is capitalizing on shifting monetary policy expectations and persistent geopolitical concerns that typically drive investors toward safe-haven assets.

The performance metrics for gold are commanding attention. Over the past three months, the value has advanced by 22.77%. Since the start of the year, the gain stands at an impressive 53.68%, while the one-year performance shows a substantial increase of 52.41%. These figures underscore a powerful and sustained bullish trend for the commodity.

A Direct Play on Physical Gold

The IAUM ETF distinguishes itself by holding exclusively physical gold bullion. Its current holdings amount to 1.335 million ounces, equivalent to 41.55 tonnes. All bars are stored in high-security vaults in London, under the custody of JPMorgan. This structure offers a pure, concentrated investment; the fund's value is tied directly to the spot price of gold, without the complications of mining company stocks or other derivatives.

Should investors sell immediately? Or is it worth buying iShares® Gold Trust Micro?

When compared to larger competitors like the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU), the Micro ETF presents a compelling case. It maintains low expense ratios while demonstrating sufficient market liquidity. Data from the last three months shows an average daily trading volume of 3.6 million shares, ensuring that investors can typically enter and exit positions with ease.

Monetary Policy Shift Fuels the Rally

The primary catalyst for this gold rush is a dramatic shift in the outlook for U.S. interest rates. Market pricing now indicates an 81% probability of an interest rate cut by the Federal Reserve in December, a significant jump from just 40% a week ago. This potential pivot in Fed policy, combined with ongoing robust gold purchases by central banks worldwide, has created an ideal environment for price appreciation. The international gold price recently reached $4,144.53 per ounce.

A Discount Presents a Potential Opportunity

Adding to the investment thesis, the IAUM ETF is currently trading at a 0.2% discount to its net asset value (NAV). In the midst of such a powerful upward trend, this pricing discrepancy could offer an additional margin of potential gain for new investors. The critical question for the market is whether the current momentum is sufficient to propel the gold price to break through to fresh record highs.