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The allure of gold has returned in recent months on a decline in bond yields and a weaker U.S. dollar. The bullion recently touched an all-time high, topping $2,100 per ounce, and is expected to increase further. A potential shift in monetary policy presents an intriguing scenario for investors looking into 2024 (read: Gold Tops $2,100: Here's How to Bet With ETFs).
Given the optimism, investors have a long list of options to tap into the metal’s rally. We have highlighted the five most popular options that are directly linked to the spot gold price or futures to gain exposure to the metal. These include SPDR Gold Trust ETF (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) ), SPDR Gold MiniShares Trust (GLDM - Free Report) , Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL - Free Report) and iShares Gold Trust Micro (IAUM - Free Report) . All these ETFs have a Zacks ETF Rank #3 (Hold).
The Fed has indicated a possible end to its rate-hiking cycle, with expectations of lower borrowing costs in 2024. In the latest meeting last week, the central bank has kept the federal funds rate steady at 5.25%-5.50% since late 2023 and penciled in three rate cuts for 2024, compared with the previous forecast of two. The cuts are expected to bring the key policy rate down to 4.4-4.9% by the end of 2024. Lower interest rates are usually good for gold, as it weakens the U.S. dollar. A weak dollar makes bullion cheaper for overseas buyers, thereby driving gold prices higher (read: Sector ETFs to Benefit From Fed Rate Cut Talks).
Notably, gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity costs of holding a non-yielding bullion.
Additionally, geopolitical tensions like the Israel-Hamas conflict will continue to raise safe-haven buying, making gold attractive. Gold is often used as a means of preserving wealth during times of financial and political uncertainty. It usually does well when other asset classes struggle. Elections across the globe in 2024, including in the United States, Taiwan, India, Mexico, Russia, South Africa, the European Union and the United Kingdom, are also anticipated to sustain robust demand for gold as investors seek to hedge against potential financial risks associated with a change in leadership.
Further, continued buying trends from global central banks and increased economic uncertainty due to the shift in China’s growth model may set the stage for gold to reach new highs in 2024. Several analysts are bullish on gold for 2024. WisdomTree expects gold price to reach $2,300 next year if the fundamentals remain strong. J.P. Morgan forecasts gold to outshine the rest of the metal sector, citing the Fed cutting cycle and falling U.S. real yields as the key drivers of gold prices in 2024.
SPDR Gold Trust ETF tracks the price of gold bullion measured in U.S. dollars and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF with AUM of $56 billion and a heavy volume of about 8 million shares a day. SPDR Gold Trust ETF charges 40 bps in fees per year from investors (read: Gold at All-Time High: More ETF Rally Likely in 2024).
iShares Gold Trust offers exposure to the day-to-day movement of the price of gold bullion. It is backed by physical gold under the custody of JP Morgan Chase Bank in London. iShares Gold Trust charges 25 bps in annual fees. It trades in average daily volumes of 6 million shares and has AUM of $25.4 billion.
SPDR Gold MiniShares Trust seeks to reflect the performance of the price of gold bullion. It is a slightly modified alternative to the State Street behemoth gold fund GLD. SPDR Gold MiniShares Trust is the low-cost choice in the U.S. listed physically gold-backed ETF space, charging investors 10 bps in annual fees. It has $6.1 billion in AUM and trades in a solid average daily volume of 2 million shares.
Aberdeen Standard Physical Swiss Gold Shares ETF tracks the price of gold bullion. The Trust holds allocated physical gold bullion bars stored in secure vaults in Zurich, Switzerland and London, the United Kingdom. Aberdeen Standard Physical Swiss Gold Shares ETF has amassed $2.7 billion in its asset base and trades in a solid volume of 2.1 million shares per day. It charges 17 bps in annual fees per year.
iShares Gold Trust Micro offers exposure to the day-to-day movement of the price of gold bullion. It is the lowest-cost gold ETF on the market, having an expense ratio of 0.09%. iShares Gold Trust Micro has amassed $1.2 billion in its asset base while trading in an average daily volume of 344,000 shares.
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Gold ETFs Set to Shine in 2024
The allure of gold has returned in recent months on a decline in bond yields and a weaker U.S. dollar. The bullion recently touched an all-time high, topping $2,100 per ounce, and is expected to increase further. A potential shift in monetary policy presents an intriguing scenario for investors looking into 2024 (read: Gold Tops $2,100: Here's How to Bet With ETFs).
Given the optimism, investors have a long list of options to tap into the metal’s rally. We have highlighted the five most popular options that are directly linked to the spot gold price or futures to gain exposure to the metal. These include SPDR Gold Trust ETF (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) ), SPDR Gold MiniShares Trust (GLDM - Free Report) , Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL - Free Report) and iShares Gold Trust Micro (IAUM - Free Report) . All these ETFs have a Zacks ETF Rank #3 (Hold).
The Fed has indicated a possible end to its rate-hiking cycle, with expectations of lower borrowing costs in 2024. In the latest meeting last week, the central bank has kept the federal funds rate steady at 5.25%-5.50% since late 2023 and penciled in three rate cuts for 2024, compared with the previous forecast of two. The cuts are expected to bring the key policy rate down to 4.4-4.9% by the end of 2024. Lower interest rates are usually good for gold, as it weakens the U.S. dollar. A weak dollar makes bullion cheaper for overseas buyers, thereby driving gold prices higher (read: Sector ETFs to Benefit From Fed Rate Cut Talks).
Notably, gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity costs of holding a non-yielding bullion.
Additionally, geopolitical tensions like the Israel-Hamas conflict will continue to raise safe-haven buying, making gold attractive. Gold is often used as a means of preserving wealth during times of financial and political uncertainty. It usually does well when other asset classes struggle. Elections across the globe in 2024, including in the United States, Taiwan, India, Mexico, Russia, South Africa, the European Union and the United Kingdom, are also anticipated to sustain robust demand for gold as investors seek to hedge against potential financial risks associated with a change in leadership.
Further, continued buying trends from global central banks and increased economic uncertainty due to the shift in China’s growth model may set the stage for gold to reach new highs in 2024. Several analysts are bullish on gold for 2024. WisdomTree expects gold price to reach $2,300 next year if the fundamentals remain strong. J.P. Morgan forecasts gold to outshine the rest of the metal sector, citing the Fed cutting cycle and falling U.S. real yields as the key drivers of gold prices in 2024.
Ways to Play
SPDR Gold Trust ETF (GLD - Free Report)
SPDR Gold Trust ETF tracks the price of gold bullion measured in U.S. dollars and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF with AUM of $56 billion and a heavy volume of about 8 million shares a day. SPDR Gold Trust ETF charges 40 bps in fees per year from investors (read: Gold at All-Time High: More ETF Rally Likely in 2024).
iShares Gold Trust (IAU - Free Report)
iShares Gold Trust offers exposure to the day-to-day movement of the price of gold bullion. It is backed by physical gold under the custody of JP Morgan Chase Bank in London. iShares Gold Trust charges 25 bps in annual fees. It trades in average daily volumes of 6 million shares and has AUM of $25.4 billion.
SPDR Gold MiniShares Trust (GLDM - Free Report)
SPDR Gold MiniShares Trust seeks to reflect the performance of the price of gold bullion. It is a slightly modified alternative to the State Street behemoth gold fund GLD. SPDR Gold MiniShares Trust is the low-cost choice in the U.S. listed physically gold-backed ETF space, charging investors 10 bps in annual fees. It has $6.1 billion in AUM and trades in a solid average daily volume of 2 million shares.
Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL - Free Report)
Aberdeen Standard Physical Swiss Gold Shares ETF tracks the price of gold bullion. The Trust holds allocated physical gold bullion bars stored in secure vaults in Zurich, Switzerland and London, the United Kingdom. Aberdeen Standard Physical Swiss Gold Shares ETF has amassed $2.7 billion in its asset base and trades in a solid volume of 2.1 million shares per day. It charges 17 bps in annual fees per year.
iShares Gold Trust Micro (IAUM - Free Report)
iShares Gold Trust Micro offers exposure to the day-to-day movement of the price of gold bullion. It is the lowest-cost gold ETF on the market, having an expense ratio of 0.09%. iShares Gold Trust Micro has amassed $1.2 billion in its asset base while trading in an average daily volume of 344,000 shares.