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After an impressive relief rally from U.S. equities, opportunistic investors are shifting their attention back to commodity ETFs, particularly those focused on oil and gold.
With crude oil prices hovering near four-year lows and precious metals recently pulling back from 2025 highs, value seekers and risk-conscious investors are once again looking to commodities for portfolio protection and potential upside.
Historically, commodities such as oil and gold have proven resilient during inflationary periods and economic volatility—traits that are especially appealing in today’s environment of sticky inflation, global uncertainty and market turbulence.
As the Trump administration’s expansive trade war policy continues to stir fears of stagflation, commodity ETFs are regaining relevance as powerful diversification tools.
The largest oil ETF, the United States Oil Fund LP (USO), and the largest gold fund, the SPDR Gold Shares ETF (GLD), rose approximately 5% and 4%, respectively, in the first two days of trading this week, while U.S. stocks, as measured by the Vanguard S&P 500 ETF (VOO), were off by about 1%.
Oil, Gold ETFs Gain as US Stocks Retreat
The S&P 500 recently ended a rare nine-day winning streak—the longest in two decades—triggering a wave of profit-taking. Market gains, largely fueled by optimism over resilient corporate earnings, were dampened by renewed concerns over trade policy escalation and slowing global growth.
In response, many investors appear to be trimming their equity exposure and reallocating to commodities as a defensive play.
Oil ETFs like USO have attracted buyers after crude prices fell to multi-year lows, with some market participants eyeing a potential rebound if supply risks or geopolitical tensions return.
Meanwhile, gold ETFs like GLD and the iShares Gold Trust (IAU) have also seen renewed interest after a recent pullback that gave longer-term investors a chance to reenter the precious metals space at more favorable prices.
Oil & Gold ETFs as Portfolio Diversifiers
Looking ahead, oil and gold may continue to play a crucial role in diversified portfolios, especially as the U.S. economic outlook remains clouded by trade-related uncertainty and stubborn inflation.
The Trump administration’s broad and aggressive tariff policy has created ripple effects across global supply chains, contributing to elevated import costs and market volatility. If these conditions persist or worsen, the diversification benefits of commodity exposure could prove increasingly valuable.
Gold, long seen as a safe-haven asset, may be particularly useful if inflation remains elevated or if the Federal Reserve pivots toward rate cuts amid softening labor data.