Sprott Physical Gold Trust (PHYS.U) Surges 2.53% as Gold Rises on Central Bank Buys, Fed Rate-Cut Outlook

The share price of Sprott Physical Gold Trust (PHYS.U) surged to its highest level since September 2025 on Monday, with an intraday gain of 1.38%. The stock has risen 2.53% over two consecutive trading days, reflecting renewed investor confidence in gold-backed assets amid evolving macroeconomic dynamics.

Gold prices have remained a critical driver for PHYS, as the trust’s net asset value is directly tied to the price of the metal. Recent strength in gold, which approached $3,600 per ounce in late August 2025, has been fueled by central bank purchases and expectations of U.S. Federal Reserve rate cuts. Analysts highlight gold’s role as an inflation hedge and safe-haven asset, particularly in times of geopolitical uncertainty, which has bolstered demand for PHYS as a liquid proxy for physical gold.

Macro-economic policy shifts, including inflation data and dollar movements, have also influenced the stock’s trajectory. While weak July 2025 CPI readings (2.7% YoY) initially supported gold by stoking rate-cut speculation, subsequent dollar index rebounds created short-term headwinds for the trust. However, long-term optimism persists, with institutions like Goldman Sachs raising gold price targets to $4,000 per ounce by 2026, reinforcing the trust’s appeal in a risk-off environment.

Geopolitical factors and industrial demand for silver—another component of PHYS’s holdings—add complexity to its performance. Tariff-related uncertainties and energy transition trends are reshaping silver’s supply-demand balance, though gold’s dominance in the trust’s portfolio remains a stabilizing force. Seasonal demand spikes in key markets like China and India further underpin gold’s resilience, mitigating volatility from broader market swings.

Investor sentiment has shifted toward alternative assets as equity markets experience volatility. PHYS’s recent outperformance against traditional equities underscores its role as a diversification tool. With a market capitalization of C$13.32 billion and a low P/E ratio of 3.89, the trust’s structural advantages—such as its closed-end fund format and ATM equity program—enhance its flexibility to meet growing demand. However, analysts caution that short-term fluctuations remain likely as investors navigate conflicting signals from macroeconomic data and policy developments.