Gold ETF Value Check: With Gold Down 8% Since the Iran War Began, Are GLD and IAU Fairly Valued at Current Levels?

Gold’s recent slide may be a case of too much too fast, potentially signaling value with the SPDR Gold Shares and the iShares Gold Trust.

Gold was hot until it wasn’t. The commodity and bellwether exchange-traded funds (ETFs), including the SPDR Gold Shares (GLD+1.50%) and the iShares Gold Trust (IAU+1.53%), tumbled immediately following the start of the war in Iran.

More recently, there have been signs of momentum. Still, given the yellow metal’s status as a safe harbor during times of market calamity, investors are wondering if the waters are still too choppy with these two ETFs.

The golden lining (pun intended) is that the commodity and these ETFs may be undervalued today.

A quick disclaimer on that. Conversations about gold being discounted aren’t comparable to those involving value stocks because price-to-book, price-to-earnings, and other traditional valuation metrics don’t apply to bullion. U.S. interest rates largely determine gold’s investment value, with some buffering from jewelry demand.

Gold is undervalued; by how much is the question

If the big Wall Street banks are accurate in their assessments, gold is undervalued, potentially signaling an opportunity with the GLD ETF and the iShares Gold Trust.

On Monday, April 27, the yellow metal closed just above $4,700 an ounce, or well below the $5,400 an ounce Goldman Sachs expects it to reach this year and a far cry from J.P. Morgan‘s estimated range of $6,000 to $6,300. Several other big-name banks have 2026 price targets ranging from $5,000 to $6,000 an ounce, suggesting that buying a gold-backed ETF when the commodity trades at $4,700 may be a shrewd move.

In a hypothetical scenario, emphasis on “hypothetical,” say gold tops Goldman’s forecast, but fails to reach the low end of J.P. Morgan’s range. Let’s call it $5,700 an ounce before the end of this year. That implies upside of 21.2% from the April 27 close, suggesting the iShares and SPDR ETFs are undervalued today.

Yes, there are headwinds to the thesis of gold being undervalued. Namely, the Federal Reserve may be in a position where it can’t cut interest rates because inflation is sticky. That keeps bond yields high, making gold, which pays no interest, less attractive. Bullion’s ties to interest rates cannot be glossed over, but there are also bullish considerations with these commodities ETFs.

Go for the gold now and for the long term

Gold’s bumpy ride, and those of the iShares Gold Trust and the SPDR Gold Shares, immediately following the start of the war in Iran, may have surprised some investors who viewed the yellow metal as a normally docile asset. Interestingly, the commodity’s lengthy history confirms it has its bouts with volatility, as is the case with stocks.

Importantly, history indicates that following a peak in gold turbulence, those bumps usually wane 1.6 months later. That’s something to consider now that the war in Iran is two months old. Said differently, if precedent holds up, investors buying either of the gold ETFs today may be treated to calm seas.

That’s a good place to start, particularly if gold’s “old movie” repeats; it will signal that the commodity’s status as a momentum trade is waning, potentially renewing interest among long-term investors.

Speaking of long-term perspectives, market participants approaching gold and the aforementioned ETFs in that fashion may find additional value because, war-induced turbulence or not, some of the longer-ranging factors cementing the bull case for bullion are intact.

Those include the specter of long-term dollar weakness (gold’s price usually rises when the greenback falters) and the pace of U.S. government debt accumulation. To say Uncle Sam is a spendthrift may be understating things, but it underscores the case for the SPDR Gold Shares and the iShares Gold Trust, because the commodity tends to follow debt higher.