Gold Continues to Glitter: ETFs to Tap Its Safe Haven Appeal
Earlier this week, Russian president Vladimir Putin signed a revised nuclear doctrine, officially reducing the threshold for Russia’s use of nuclear weapons, further intensifying geopolitical tensions. According to Yahoo Finance, this change came after the Biden administration approved Ukraine to use U.S.-made long-range missiles to target deep within Russian territory.This recent development in the ongoing Russia-Ukraine conflict increased demand for safe-haven assets, with investors turning their attention to the yellow metal. After a downward trend influenced by the recent U.S. presidential election results, gold prices rebounded, climbing to a one-week high.Reasons for the Recent Price RallyDonald Trump’s victory in the recent Presidential elections, which saw him resume office for a second time, sparked a positive response from the markets. However, many economists warn that Trump’s primary campaign promises of imposing new tariffs and initiating a "mass deportation" of undocumented immigrants could drive prices upward.Against this backdrop, increasing exposure to gold could prove to be a smart move. Across extended investment periods, gold preserves its purchasing power, outpacing inflation and diversifying an investment portfolio due to its historical tendency to have a negative correlation with other asset classes.The Fed’s interest rate cuts have also fueled the rally in commodity prices. Following interest rate cuts in September and November, there’s a 59.1% likelihood that the Fed might go ahead with a third rate cut this year, lowering the rate to 4.25-4.5% in December, according to the CME FedWatch Tool.If the Fed goes ahead with a rate cut, the greenback may lose its strength. 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.However, the market is revising its expectations for the Fed's rate cuts next year, which could mean that any future rate cut may have a lesser impact on commodity prices.Central banks increasing purchases of the precious metal and geopolitical tensions in the Middle East also boost gold prices.Surge in Price ExpectationsGoldman Sachs analysts, as quoted on Yahoo Finance, advised investors to go long on the precious metal as central banks continue to increase their holdings of the asset. The firm has set a price target of $3,000 for gold by the end of 2025.UBS followed suit, predicting that gold will rise to $2,900 per ounce by the end of next year, as quoted on Yahoo Finance.ETFs to ConsiderAs geopolitical tensions escalate, investors can enhance their exposure to the precious metal, to potentially boost portfolio gains and better prepare for an uncertain market environment going forward.Investors should not be discouraged by any decline in gold prices. Rather, they should adopt a "buy-the-dip" strategy. Given the current global economic climate, gold remains an essential hedge for all investors, regardless of their investment theme.SPDR Gold Shares (GLD) SPDR Gold Shares charges an annual fee of 0.40% and has Zacks ETF Rank #3 (Hold), with a Medium risk outlook. The fund has gained about 2.8% since Nov. 15 (as of Nov. 19) and 36.39% over the past year.iShares Gold Trust (IAU) iShares Gold Trust charges an annual fee of 0.25% and has Zacks ETF Rank #3, with a Medium risk outlook. The fund has gained about 2.9% since Nov. 15 (as of Nov. 19) and 36.58% over the past year.SPDR Gold MiniShares Trust (GLDM) SPDR Gold MiniShares Trust charges an annual fee of 0.10% and has Zacks ETF Rank #3. The fund has gained about 2.8% since Nov. 15 (as of Nov. 19) and 36.79% over the past year.abrdn Physical Gold Shares ETF (SGOL) abrdn Physical Gold Shares ETF charges an annual fee of 0.17% and has Zacks ETF Rank #3, with a Medium risk outlook. The fund has gained about 2.8% since Nov. 15 (as of Nov. 19) and 36.69% over the past year.Goldman Sachs Physical Gold ETF (AAAU)Goldman Sachs Physical Gold ETF charges an annual fee of 0.18% and has Zacks ETF Rank #3. The fund has gained about 2.9% since Nov. 15 (as of Nov. 19) and 36.70% over the past year.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR Gold Shares (GLD): ETF Research Reports iShares Gold Trust (IAU): ETF Research Reports abrdn Physical Gold Shares ETF (SGOL): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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