Gold price has risen 10.63% over the past month and 42.90% year to date, with the precious metal poised to continue its upward momentum. This year’s rally has been fueled by dollar weakness, sustained central bank buying and safe-haven demand.
Strong fundamental indicators could extend gold’s gains into late 2025 and 2026, boosting the case for increased portfolio allocation. Goldman Sachs shares this outlook, expecting the rally to continue, as quoted on Yahoo Finance.
According to the abovementioned article, the precious metal traded near its record high, marking its sixth consecutive week of upward momentum, driven by persistent geopolitical tensions, the highest ETF inflows since 2022 and risk-off sentiment.
With tensions in the Middle East and the ongoing Russia-Ukraine conflict, the 2025 geopolitical landscape can only be described as “complicated.” In this environment, investing in gold remains an attractive strategy.
Will the Fed Slash Rates Again?
The Fed’s first rate cut of 2025 in September helped support the gold rally. Interest rate cuts by the Fed weaken the U.S. dollar, which generally leads to higher demand for gold, pushing its price upward as it becomes more affordable for buyers holding other currencies.
However, according to Reuters, recent data indicating stronger-than-expected second-quarter U.S. GDP growth eased speculation of additional rate cuts. Per the CME FedWatch tool, markets are anticipating an 87.7% likelihood of an interest rate cut in October and a 96.6% likelihood of an interest rate cut in December, lower than earlier expectations.
While a Fed rate cut would support a gold rally, even if the Fed does not deliver another rate cut, the market had already priced in two cuts for 2025, meaning any deviation from market expectations could further boost the precious metal’s price, as investor nervousness rises.
ETFs to Consider
The yellow metal remains a crucial hedge for investors amid growing macroeconomic and geopolitical uncertainty. Below, we highlight a few funds where investors can increase their allocation to gain greater exposure to gold.
Physical Gold ETFs
Investors can consider SPDR Gold Shares GLD, iShares Gold Trust IAU, SPDR Gold MiniShares Trust GLDM, abrdn Physical Gold Shares ETF SGOL and iShares Gold Trust Micro IAUM to increase their exposure to the yellow metal.
With a one-month average trading volume of 13.33 million shares, GLD is the most liquid option, ideal for active trading strategies. However, implementing an active strategy in the current landscape may not be the most effective approach.
Adopting a long-term passive investment strategy becomes the go-to approach for investors to weather short-term market storms. Investors should not be discouraged by any likely decline in gold prices. Rather, they should adopt a “buy-the-dip” strategy.
GLD has also gathered an asset base of $121.24 billion, the largest among the other options. Performance across all funds has been mostly consistent over the past month and the past year. Regarding annual fees, GLDM and IAUM are the cheapest options, charging 0.10% and 0.09% respectively, which makes them more suitable for long-term investing.
Gold Miners ETFs
These ETFs focus on gold miners, usually magnifying gold’s gains and losses. They provide access to the gold mining industry, not the commodity’s price.
Investors can consider VanEck Gold Miners ETF GDX, Sprott Gold Miners ETF SGDM, VanEck Junior Gold Miners ETF GDXJ and Sprott Junior Gold Miners ETF SGDJ.
With a one-month average trading volume of 22.94 million shares, GDX is the most liquid option. GDX has also gathered an asset base of $21.64 billion, the largest among the other options. Regarding annual fees, SGDM and SGDJ are the cheapest options, charging 0.50%.
Performance-wise, GDXJ has outperformed the other mentioned gold miners ETFs, gaining 23.82% over the past month and 76.85% over the past year.
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SPDR Gold Shares (GLD): ETF Research Reports
iShares Gold Trust (IAU): ETF Research Reports
abrdn Physical Gold Shares ETF (SGOL): ETF Research Reports
VanEck Gold Miners ETF (GDX): ETF Research Reports
VanEck Junior Gold Miners ETF (GDXJ): ETF Research Reports
Sprott Gold Miners ETF (SGDM): ETF Research Reports
Sprott Junior Gold Miners ETF (SGDJ): ETF Research Reports
SPDR Gold MiniShares Trust (GLDM): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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