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Here's Why Gold ETFs Still Make Sense for Long-Term Investors
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Key Takeaways
Gold faces near-term pressure from a hawkish Fed and a stronger dollar, but long-term demand stays supportive.
UBS expects gold prices to reach $5,400 per ounce by September 2027, supported by sustained demand.
ETFs like GLD and GDX offer investors exposure to the yellow metal.
Gold's performance in 2026 has been less impressive than its strong showing in 2025, with prices down about 4.24% year to date. Near-term headwinds could continue to weigh on the precious metal through the remainder of the year, but the outlook for 2027 appears more encouraging.
A stronger U.S. dollar and the Fed’s hawkish stance to curb inflation have weighed on gold prices, constraining the metal’s near-term performance. Higher interest rates remain a key headwind for non-yielding assets such as gold, while a stronger dollar makes the precious metal more expensive for buyers using other currencies,
However, strong inflows into gold ETFs and continued central bank purchases provide structural support for the precious metal, helping sustain long-term demand and potentially bolster price resilience amid market volatility. Despite the recent pullback, gold remains up about 2% over the past three months and approximately 0.7% over the past year.
UBS also sees potential for gold to regain momentum over the longer term. According to Yahoo Finance, the bank expects near-term headwinds from higher U.S. real yields and a stronger greenback to potentially pull gold prices toward $4,000. However, UBS anticipates that sustained longer-term demand may help cushion the decline, providing a potential foundation for a recovery.
UBS Sees a Brighter Long-Term Outlook for Gold
As quoted on the abovementioned Yahoo Finance article, UBS anticipates further gains through 2027 despite the potential for near-term price weakness. The bank estimates gold prices to climb to $4,600 per ounce by December of this year, before advancing in 2027 to $5,000 in March and $5,200 in June. The bank expects the rally to continue, with prices potentially reaching $5,400 per ounce by September 2027.
UBS' projections reflect growing optimism about gold's long-term prospects. The bank expects a gradual weakening of the greenback and continued gold accumulation by central banks, particularly China’s, to serve as key drivers of the metal's price appreciation over the coming years.
Strong Demand: A Long-Term Tailwind for Gold
Continued central bank buying is expected to remain a key structural support for gold, reinforcing the precious metal’s long-term investment appeal. UBS continues to project annual central bank gold purchases in the range of 750 to 1,000 metric tons.
According to the World Gold Council, as quoted on OilPrice.com, central bank gold purchases reached approximately 289 tons in the second quarter this year, up 62% year over year. This sustained buying trend highlights the growing emphasis among monetary authorities on reserve diversification, including reducing their dependence on conventional reserve currencies.
Investor appetite for physically backed gold ETFs remained strong in September, with global funds attracting $10 billion in fresh inflows, bringing third-quarter inflows to a record $31 billion, as per the World Gold Council. The sustained buying pushed global gold ETF holdings up by 67 metric tons to a record 4,256 metric tons.
China Emerges as a Key Driver of Gold Demand
China’s appetite for gold remains strong, with both its central bank and households contributing to demand. Per China’s State Administration of Foreign Exchange data, as quoted on a CNBC article, the People’s Bank of China purchased about 23 metric tons in September, its largest monthly addition in nearly three years, extending its buying streak to 23 consecutive months.
While Beijing continues to diversify its reserves away from the U.S. dollar, Chinese households are also increasing their gold purchases as a safe-haven investment amid economic uncertainty. Customs data show that China imported more than 1,000 metric tons of gold worth $158.8 billion in the first eight months this year, exceeding the full-year 2025 figures of 886 metric tons and $96.5 billion, respectively.
The Portfolio Diversifier Investors Shouldn't Overlook
The precious metal continues to serve as an important portfolio diversifier and hedge for investors across different investment themes, especially during periods of elevated market volatility and economic uncertainty.
According to the World Gold Council, ongoing inflationary pressures, high energy costs, growing concerns about equity valuations, especially across AI-related stocks and increased volatility in bond markets may have encouraged investors to turn to gold for diversification and portfolio resilience.
Given the prevailing market uncertainty, a defensive and conservative investment approach may help investors navigate short-term volatility. Gold stands out as a compelling portfolio allocation, offering diversification benefits and the potential to help mitigate downside risk.
Building Portfolio Exposure to Gold With ETFs
The prospect of a hawkish Fed and interest rates remaining higher for longer, potentially through the end of 2026 and into early 2027, remains a key headwind for non-yielding assets such as gold. While the Fed’s policy stance could weigh on the metal’s near-term performance, its long-term investment case remains intact.
While gold prices are likely to remain sensitive to rate hike expectations and incoming economic data in the near term, underlying structural tailwinds continue to reinforce the precious metal’s long-term bullish outlook.
Against this backdrop, adopting a long-term, passive investment approach may be a prudent way to build portfolio exposure to gold. Rather than reacting to short-term price fluctuations, investors can consider a disciplined buy-and-hold strategy through gold ETFs, aligning their investments with a longer time horizon.
Recent price weakness could also offer an opportunity for investors seeking to gradually build exposure through gold ETFs using a disciplined buy-the-dip approach. The metal has declined about 4.27% over the past month and 0.2% in the latest trading session. Such pullbacks could present an attractive entry point for investors seeking strategic exposure.
By gradually building positions through gold ETFs during market dips, investors can spread their entry points over time and potentially benefit from periods of price weakness while maintaining a long-term investment perspective.
Gold ETFs to Watch for Long-Term Exposure
Below, we have highlighted a few funds in which investors can increase their allocation to gain greater exposure to gold.
Investors can consider SPDR Gold Shares (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM - Free Report) and iShares Gold Trust Micro (IAUM - Free Report) to increase their exposure to the yellow metal.
With a one-month average trading volume of 8.05 million shares, GLD is the most liquid option. It has gathered an asset base of $141.99 billion, also making it the largest fund 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 Miner ETFs Worth a Closer Look
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.
With a one-month average trading volume of 19.45 million shares, GDX is the most liquid option. GDX has also gathered an asset base of $26.81 billion, the largest among the other options. Regarding annual fees, SGDM is the cheapest option, charging 0.46%.
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Here's Why Gold ETFs Still Make Sense for Long-Term Investors
Key Takeaways
Gold's performance in 2026 has been less impressive than its strong showing in 2025, with prices down about 4.24% year to date. Near-term headwinds could continue to weigh on the precious metal through the remainder of the year, but the outlook for 2027 appears more encouraging.
A stronger U.S. dollar and the Fed’s hawkish stance to curb inflation have weighed on gold prices, constraining the metal’s near-term performance. Higher interest rates remain a key headwind for non-yielding assets such as gold, while a stronger dollar makes the precious metal more expensive for buyers using other currencies,
However, strong inflows into gold ETFs and continued central bank purchases provide structural support for the precious metal, helping sustain long-term demand and potentially bolster price resilience amid market volatility. Despite the recent pullback, gold remains up about 2% over the past three months and approximately 0.7% over the past year.
UBS also sees potential for gold to regain momentum over the longer term. According to Yahoo Finance, the bank expects near-term headwinds from higher U.S. real yields and a stronger greenback to potentially pull gold prices toward $4,000. However, UBS anticipates that sustained longer-term demand may help cushion the decline, providing a potential foundation for a recovery.
UBS Sees a Brighter Long-Term Outlook for Gold
As quoted on the abovementioned Yahoo Finance article, UBS anticipates further gains through 2027 despite the potential for near-term price weakness. The bank estimates gold prices to climb to $4,600 per ounce by December of this year, before advancing in 2027 to $5,000 in March and $5,200 in June. The bank expects the rally to continue, with prices potentially reaching $5,400 per ounce by September 2027.
UBS' projections reflect growing optimism about gold's long-term prospects. The bank expects a gradual weakening of the greenback and continued gold accumulation by central banks, particularly China’s, to serve as key drivers of the metal's price appreciation over the coming years.
Strong Demand: A Long-Term Tailwind for Gold
Continued central bank buying is expected to remain a key structural support for gold, reinforcing the precious metal’s long-term investment appeal. UBS continues to project annual central bank gold purchases in the range of 750 to 1,000 metric tons.
According to the World Gold Council, as quoted on OilPrice.com, central bank gold purchases reached approximately 289 tons in the second quarter this year, up 62% year over year. This sustained buying trend highlights the growing emphasis among monetary authorities on reserve diversification, including reducing their dependence on conventional reserve currencies.
Investor appetite for physically backed gold ETFs remained strong in September, with global funds attracting $10 billion in fresh inflows, bringing third-quarter inflows to a record $31 billion, as per the World Gold Council. The sustained buying pushed global gold ETF holdings up by 67 metric tons to a record 4,256 metric tons.
China Emerges as a Key Driver of Gold Demand
China’s appetite for gold remains strong, with both its central bank and households contributing to demand. Per China’s State Administration of Foreign Exchange data, as quoted on a CNBC article, the People’s Bank of China purchased about 23 metric tons in September, its largest monthly addition in nearly three years, extending its buying streak to 23 consecutive months.
While Beijing continues to diversify its reserves away from the U.S. dollar, Chinese households are also increasing their gold purchases as a safe-haven investment amid economic uncertainty. Customs data show that China imported more than 1,000 metric tons of gold worth $158.8 billion in the first eight months this year, exceeding the full-year 2025 figures of 886 metric tons and $96.5 billion, respectively.
The Portfolio Diversifier Investors Shouldn't Overlook
The precious metal continues to serve as an important portfolio diversifier and hedge for investors across different investment themes, especially during periods of elevated market volatility and economic uncertainty.
According to the World Gold Council, ongoing inflationary pressures, high energy costs, growing concerns about equity valuations, especially across AI-related stocks and increased volatility in bond markets may have encouraged investors to turn to gold for diversification and portfolio resilience.
Given the prevailing market uncertainty, a defensive and conservative investment approach may help investors navigate short-term volatility. Gold stands out as a compelling portfolio allocation, offering diversification benefits and the potential to help mitigate downside risk.
Building Portfolio Exposure to Gold With ETFs
The prospect of a hawkish Fed and interest rates remaining higher for longer, potentially through the end of 2026 and into early 2027, remains a key headwind for non-yielding assets such as gold. While the Fed’s policy stance could weigh on the metal’s near-term performance, its long-term investment case remains intact.
While gold prices are likely to remain sensitive to rate hike expectations and incoming economic data in the near term, underlying structural tailwinds continue to reinforce the precious metal’s long-term bullish outlook.
Against this backdrop, adopting a long-term, passive investment approach may be a prudent way to build portfolio exposure to gold. Rather than reacting to short-term price fluctuations, investors can consider a disciplined buy-and-hold strategy through gold ETFs, aligning their investments with a longer time horizon.
Recent price weakness could also offer an opportunity for investors seeking to gradually build exposure through gold ETFs using a disciplined buy-the-dip approach. The metal has declined about 4.27% over the past month and 0.2% in the latest trading session. Such pullbacks could present an attractive entry point for investors seeking strategic exposure.
By gradually building positions through gold ETFs during market dips, investors can spread their entry points over time and potentially benefit from periods of price weakness while maintaining a long-term investment perspective.
Gold ETFs to Watch for Long-Term Exposure
Below, we have highlighted a few funds in which investors can increase their allocation to gain greater exposure to gold.
Investors can consider SPDR Gold Shares (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM - Free Report) and iShares Gold Trust Micro (IAUM - Free Report) to increase their exposure to the yellow metal.
With a one-month average trading volume of 8.05 million shares, GLD is the most liquid option. It has gathered an asset base of $141.99 billion, also making it the largest fund 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 Miner ETFs Worth a Closer Look
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 - Free Report) , Sprott Gold Miners ETF (SGDM - Free Report) and Sprott Junior Gold Miners ETF (SGDJ - Free Report) .
With a one-month average trading volume of 19.45 million shares, GDX is the most liquid option. GDX has also gathered an asset base of $26.81 billion, the largest among the other options. Regarding annual fees, SGDM is the cheapest option, charging 0.46%.