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Gold ETF Down 13% in Six Months: 4 Bullish Reasons for Long Term
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Key Takeaways
Gold's 11% six-month decline may offer a long-term entry point.
Central-bank buying and reserve diversification support gold demand.
AI bubble risks could boost gold as a defensive asset.
Gold has been subdued in the year-to-date frame, with much of the selloff coming over the past six months. Higher rates and a strong U.S. dollar have faded the yellow metal’s allure. Gold bullion ETF SPDR Gold Trust (GLD - Free Report) is down about 13.5% over the past six months (as of Oct. 7, 2026), while it is off 5.6% so far this year.
Meanwhile, Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has gained 5.5% in the past six-month frame and is up 7.1% year to date.
Will Fed Pause Rate Hikes?
The U.S. economy added 29,000 jobs in September 2026, following a downwardly revised 133,000 in August and well below forecasts of 90,000, per trading economics.U.S. credit card debt stands at $1.26 trillion as of the second quarter of 2026, remaining just shy of the record high, indicating that consumers are becoming cash-starved.
Auto loan balances increased by $28 billion to $1.71 trillion. Moreover, per Truflation, U.S. inflation stood at 2.26% (at the time of writing), less than the August consumer price index of 3.4%.
Against this backdrop, the Fed might not be too inclined to enact the second rate hike this year. And if any resolution to the Iran war takes place post-Midterms, we might see a dip in energy-led inflation, which will provide the Fed another reason to stay dovish.
Gold prices tend to move inversely to interest rates. When interest rates decline, non-interest-bearing gold becomes more attractive as it competes more favorably with interest-bearing investments like bonds.
Central Banks Are Turning to Gold
One of the biggest reasons why gold could remain resilient despite higher rates is central-bank demand.
Central banks have been placing greater emphasis on gold as part of their reserve strategies. They have increased gold purchases since 2022, when G7 nations froze Russian central bank assets following the invasion of Ukraine, per Goldman Sachs, as said in late August.
Goldman Sachs Research also expects central banks to buy an average of 50 tons of gold per month in 2026, up from an average of 17 tons per month before 2022.
This demand can be an important source of support for prices, particularly when other investors are worried about currencies, sovereign debt or geopolitical risks. Goldman Sachs Research forecasts the precious metal will rise to $4,900 per troy ounce by the end of 2026.
Reserve Diversification: A Long-Term Tailwind
For decades, U.S. dollar assets and Treasuries have been central to global reserve management. But concerns about geopolitical fragmentation, sovereign debt, inflation and currency risks are encouraging some central banks to reassess how their reserves are positioned.
Gold offers something Treasuries cannot: it is not backed by another government's promise to repay. Gold officially overtook U.S. Treasuries as a share of global reserves. Gold's share of total official reserve assets rose to 27% at the end of 2025, while U.S. Treasuries fell to 22% from 25%, as mentioned in the Financial Post.
AI Boom to Burst?
Former BitMEX CEO Arthur Hayes believes that the artificial intelligence (AI) boom will eventually produce a familiar outcome like some past bubble bursts. Too much investment and low returns will cause a crash and, ultimately, will lead to a bailout, as quoted on CNBC.
The belief goes against the massive investment pouring into AI infrastructure, as technology companies race for the computing power needed to develop and run increasingly advanced AI models. Hayes sees that buildout eventually becoming overcapacity. If it holds, any selloff from the AI boom bubble burst will set the stage for an upside in gold.
Gold to Hit $20,000?
Kevin Smith, founder and CEO of Crescat Capital, believes that expanding global money supply, large fiscal deficits and rising debt will keep supporting the precious metal as central banks increasingly turn to gold. Crescat sets a $20,000-an-ounce gold price target in approximately four years, as quoted on Kitco.
Bottom Line
Higher rates do not automatically mean lower gold prices. If inflation, geopolitical tensions, fiscal concerns and central-bank demand remain strong, gold could continue to shine even as bond yields climb.
Against this backdrop, investors can keep a close track of ETFs like GLD, iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM - Free Report) , iShares Gold Trust Micro (IAUM - Free Report) , VanEck Gold Miners ETF (GDX - Free Report) and VanEck Merk Gold Trust (OUNZ - Free Report) .
Image: Bigstock
Gold ETF Down 13% in Six Months: 4 Bullish Reasons for Long Term
Key Takeaways
Gold has been subdued in the year-to-date frame, with much of the selloff coming over the past six months. Higher rates and a strong U.S. dollar have faded the yellow metal’s allure. Gold bullion ETF SPDR Gold Trust (GLD - Free Report) is down about 13.5% over the past six months (as of Oct. 7, 2026), while it is off 5.6% so far this year.
Meanwhile, Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has gained 5.5% in the past six-month frame and is up 7.1% year to date.
Will Fed Pause Rate Hikes?
The U.S. economy added 29,000 jobs in September 2026, following a downwardly revised 133,000 in August and well below forecasts of 90,000, per trading economics.U.S. credit card debt stands at $1.26 trillion as of the second quarter of 2026, remaining just shy of the record high, indicating that consumers are becoming cash-starved.
Auto loan balances increased by $28 billion to $1.71 trillion. Moreover, per Truflation, U.S. inflation stood at 2.26% (at the time of writing), less than the August consumer price index of 3.4%.
Against this backdrop, the Fed might not be too inclined to enact the second rate hike this year. And if any resolution to the Iran war takes place post-Midterms, we might see a dip in energy-led inflation, which will provide the Fed another reason to stay dovish.
Gold prices tend to move inversely to interest rates. When interest rates decline, non-interest-bearing gold becomes more attractive as it competes more favorably with interest-bearing investments like bonds.
Central Banks Are Turning to Gold
One of the biggest reasons why gold could remain resilient despite higher rates is central-bank demand.
Central banks have been placing greater emphasis on gold as part of their reserve strategies. They have increased gold purchases since 2022, when G7 nations froze Russian central bank assets following the invasion of Ukraine, per Goldman Sachs, as said in late August.
Goldman Sachs Research also expects central banks to buy an average of 50 tons of gold per month in 2026, up from an average of 17 tons per month before 2022.
This demand can be an important source of support for prices, particularly when other investors are worried about currencies, sovereign debt or geopolitical risks. Goldman Sachs Research forecasts the precious metal will rise to $4,900 per troy ounce by the end of 2026.
Reserve Diversification: A Long-Term Tailwind
For decades, U.S. dollar assets and Treasuries have been central to global reserve management. But concerns about geopolitical fragmentation, sovereign debt, inflation and currency risks are encouraging some central banks to reassess how their reserves are positioned.
Gold offers something Treasuries cannot: it is not backed by another government's promise to repay. Gold officially overtook U.S. Treasuries as a share of global reserves. Gold's share of total official reserve assets rose to 27% at the end of 2025, while U.S. Treasuries fell to 22% from 25%, as mentioned in the Financial Post.
AI Boom to Burst?
Former BitMEX CEO Arthur Hayes believes that the artificial intelligence (AI) boom will eventually produce a familiar outcome like some past bubble bursts. Too much investment and low returns will cause a crash and, ultimately, will lead to a bailout, as quoted on CNBC.
The belief goes against the massive investment pouring into AI infrastructure, as technology companies race for the computing power needed to develop and run increasingly advanced AI models. Hayes sees that buildout eventually becoming overcapacity. If it holds, any selloff from the AI boom bubble burst will set the stage for an upside in gold.
Gold to Hit $20,000?
Kevin Smith, founder and CEO of Crescat Capital, believes that expanding global money supply, large fiscal deficits and rising debt will keep supporting the precious metal as central banks increasingly turn to gold. Crescat sets a $20,000-an-ounce gold price target in approximately four years, as quoted on Kitco.
Bottom Line
Higher rates do not automatically mean lower gold prices. If inflation, geopolitical tensions, fiscal concerns and central-bank demand remain strong, gold could continue to shine even as bond yields climb.
Against this backdrop, investors can keep a close track of ETFs like GLD, iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM - Free Report) , iShares Gold Trust Micro (IAUM - Free Report) , VanEck Gold Miners ETF (GDX - Free Report) and VanEck Merk Gold Trust (OUNZ - Free Report) .