Gold ETFs to Watch as the Metal Hits Fresh Highs

Gold’s rally looks set to extend further, supported by the Fed’s September cut and two additional cuts expected later in the year. The price of the precious metal has risen 11.19% over the past month and 41.48% year to date.

Strong fundamental indicators could extend gold’s gains into late 2025 and 2026, boosting the case for increased portfolio allocation. This year’s rally has been fueled by dollar weakness, sustained central bank buying and safe-haven demand amid geopolitical and trade tensions.

With the greenback expected to stay under pressure and global risks set to persist, gold prices are likely to climb further next year. Rising inflation concerns and legal uncertainty surrounding the Trump administration’s tariffs add to the increasingly volatile macroeconomic environment, hinting that gold’s record-breaking rally may continue.

Fed Cuts and Dollar Weakness Fuel Gold’s Rally

Gold hit a record in early-week trading, driven by three-year high ETF inflows and bets on ongoing Fed rate cuts, as quoted on Yahoo Finance. According to the CME FedWatch tool, markets are anticipating a 91.9% likelihood of an interest rate cut in October and a 98.8% likelihood of an interest rate cut in December.

The greenback's value tends to move inversely with interest rate adjustments by the Fed. Interest rate cuts by the Fed make the dollar less attractive to foreign investors, as this weakens the U.S. dollar. A weaker U.S. dollar generally leads to higher demand for gold, pushing its price upward as it becomes more affordable for buyers holding other currencies.

Per TradingView, the U.S. Dollar Index (DXY) has fallen 1.21 % over the past month and 10.24% year to date. The index has recorded an all-time decline of 18.75%.

ETFs to Consider

Given the increasing macroeconomic uncertainty and geopolitical volatility, gold remains an essential hedge across all investment strategies. Investors can enhance their exposure to the precious metal to potentially boost portfolio gains and better prepare for an uncertain market environment going forward.

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 11.97 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.

GLD has also gathered an asset base of $116.49 billion, the largest among the other options. Performance across all funds has been mostly consistent. 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 21.33 million shares, GDX is the most liquid option. GDX has also gathered an asset base of $19.93 billion, the largest among the other options. Regarding annual fees, SGDM and SGDJ are the cheapest options, both charging 0.50%.

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This article originally published on Zacks Investment Research (zacks.com).

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