PHYS-U Plunges 0.74% to 2025 Low as Geopolitical Calm Curbs Safe-Haven Demand

Sprott Physical-U (PHYS-U) fell 0.74% on Wednesday, marking its lowest level since September 2025, with an intraday decline of 1.20%. The ETF, which holds physical gold bullion, faces pressure amid shifting investor sentiment and macroeconomic dynamics.

Geopolitical tensions and trade policy uncertainties have historically driven demand for gold as a safe-haven asset. Analysts highlight that PHYS-U’s structure—backed by unencumbered physical gold—positions it as a hedge against operational risks tied to gold producers and geopolitical volatility. However, recent stabilization in global tensions may have reduced immediate demand for the ETF.

Market volatility and inflationary pressures remain key factors. Central banks are purchasing gold at a record pace, indirectly supporting demand for physically backed ETFs like PHYS-U. Yet, the trust’s performance is also influenced by broader inflation expectations and the relative appeal of gold compared to fixed-income assets, which face devaluation risks in high-inflation environments.

Currency fluctuations further complicate the outlook. A weaker Canadian dollar could enhance the USD value of PHYS-U, given gold’s USD pricing. However, rate cut expectations have already partially priced into gold, dampening near-term momentum. Analysts caution that further monetary easing could reignite demand for physical gold, but short-term overbought conditions suggest caution for traders.

Structural advantages, such as full transparency and liquidity, remain a cornerstone of PHYS-U’s appeal. Unlike synthetic or futures-based alternatives, the trust’s unencumbered holdings ensure direct exposure to physical bullion. This differentiates it from gold mining stocks, which carry operational risks like production delays or geopolitical disruptions in mining regions.

Analysts recommend maintaining a long-term perspective, emphasizing PHYS-U as a diversified hedge against market downturns. Strategic positioning includes buying dips in gold prices while avoiding overexposure during short-term peaks. The ETF’s dual-trading structure (CAD and USD) offers flexibility, but its performance will ultimately depend on sustained demand for tangible assets amid evolving macroeconomic conditions.