Gold Gearing Up for Another Solid Run? ETFs to Ride the Trend

Gold prices have already climbed 28.33% over the past six months and 64.74% year to date. With forecasts pointing to further gains next year, the case for increased portfolio exposure continues to strengthen.

Increasing central bank buying, ongoing economic uncertainty, expectations of further Fed rate cuts next year and a softer dollar are reinforcing the case for greater exposure to gold. At the same time, gold’s safe-haven appeal remains intact, providing a crucial hedge against rising macroeconomic and geopolitical risks.

With persistent bubble concerns surrounding AI, the precious metal also stands out as a reliable diversification tool for tech-heavy portfolios.

Why a Weaker Dollar Works in Gold’s Favor

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 1.06% over the past month and 9.23% year to date. The index has recorded an all-time decline of 17.83%.

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. Expected rate cuts and a weaker dollar should continue to support the upward trend.

President Trump’s indication that the next Fed chair will favor significantly lower interest rates, combined with economic data supporting rate cuts next year, presents an increasingly optimistic backdrop for gold.

How High Could Gold Go in 2026?

With more investors entering the market and risks ranging from U.S. policy uncertainty to the war in Ukraine, analysts at JPMorgan, Bank of America and Metals Focus now see gold climbing to $5,000 per troy ounce in 2026, per Reuters.

Bullish forecasts are stacking up, with JPMorgan expecting prices to top $5,000 by fourth-quarter 2026 and Metals Focus also projecting prices to touch $5,000 by year-end, as quoted on the abovementioned Reuters article.

As per another Reuters article, Morgan Stanley sees gold reaching $4,800 an ounce by the fourth quarter, driven by stronger Chinese retail demand, rising central bank purchases and ongoing global growth worries.

ETFs to Consider

In the current market backdrop, active investing may struggle to add value, reinforcing the case for a long-term passive strategy to help investors weather short-term market disruptions.

Despite rising concerns about a potential correction, investors should not be discouraged by any near-term pullback in gold prices, as the fundamentals underpinning the rally remain strong. Instead, they should adopt a "buy-the-dip" strategy.

Below, we have highlighted 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 9.88 million shares, GLD is the most liquid option. GLD has gathered an asset base of $145.91 billion, the largest among the other options. 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 21.87 million shares, GDX is the most liquid option. GDX has also gathered an asset base of $25.17 billion, the largest among the other options. Regarding annual fees, SGDM and SGDJ are the cheapest options, charging 0.50%.

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

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