Gold prices surged to a new record high of $3,508.54 per ounce on Tuesday, fueled by sustained investor optimism about a potential U.S. Federal Reserve rate cut and a weakening U.S. dollar.
What Is Supporting The Gold Price Rally?
Darshan Desai, CEO of Aspect Bullion & Refinery, noted the market’s underlying strength.
“Steady inflows into precious metal ETFs and sustained central bank purchases are helping prevent any significant downward correction, even in the absence of strong immediate catalysts,” he said.
Desai added that unless a major negative event occurs, gold prices are likely to remain elevated.
Central Banks Add More Gold As Reserve Assets
A significant long-term driver of this trend is a major shift in global reserve management. For the first time since 1996, foreign central banks now hold more gold than U.S. Treasuries, according to a chart from Crescat Capital shared by macro strategist Otavio Costa.
This strategic shift underscores a growing preference for gold as a store of value over the dollar. Costa believes the rally is far from over, stating, “Gold at all-time highs and the party is only getting started, in my view.”
How Has Gold Performed Over Time?
This sentiment is echoed by long-term performance data. Over the past 25 years, gold has delivered double the returns of the S&P 500, as highlighted in a chart by Mike Zaccardi.
The metal’s appeal is also magnified when considering the dollar’s declining purchasing power.
As noted by X user David Sommers, the price of gold has increased 100-fold from $35 in 1971—when the U.S. ended dollar convertibility to gold—a stark contrast to the dollar’s significant loss of value over the same period.
How Can Investors Gain Exposure To The Gold Upside?
For investors looking to gain exposure to the precious metal, several ETFs offer a convenient and liquid way to participate in the market. These funds can be broadly categorized into those that hold physical gold and those that invest in gold mining companies.
Physical Gold ETFs: These funds aim to track the spot price of gold by holding physical bullion in secure vaults. The largest and most popular options include:
| Gold ETFs | YTD Performance | One Year Performance |
| Franklin Responsibly Sourced Gold ETF (NYSE:FGDL) | 29.70% | 38.19% |
| Goldman Sachs Physical Gold ETF (BATS:AAAU) | 29.71% | 38.28% |
| GraniteShares Gold Trust (NYSE:BAR) | 29.84% | 38.50% |
| VanEck Merk Gold ETF (NYSE:OUNZ) | 29.61% | 38.28% |
| SPDR Gold Trust (NYSE:GLD) | 29.60% | 38.12% |
| iShares Gold Trust (NYSE:IAU) | 29.71% | 38.25% |
| SPDR Gold MiniShares Trust (NYSE:GLDM) | 29.82% | 38.52% |
| abrdn Physical Gold Shares ETF (NYSE:SGOL) | 29.74% | 38.35% |
| iShares Gold Trust Micro (NYSE:IAUM) | 29.86% | 38.59% |
| Invesco DB Precious Metals Fund (NYSE:DBP) | 29.63% | 33.16% |
Gold Miner ETFs: These funds invest in the stocks of companies involved in gold mining and exploration, offering leveraged exposure to the price of gold. Leading funds in this category include:
| Gold Miner ETFs | YTD Performance | One Year Performance |
| VanEck Gold Miners ETF (NYSE:GDX) | 78.75% | 69.49% |
| VanEck Junior Gold Miners ETF (NYSE:GDXJ) | 78.56% | 83.18% |
Price Action
Gold Spot US Dollar rose 0.48% to hover around $3,493.06 per ounce, as of the publication of this article. Its last record high stood at $3,508.54 per ounce. The price of the precious yellow metal has surged 22.20% over the last six months and 39.89% over the last year.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, fell on Friday. The SPY was down 0.60% at $645.05, while the QQQ declined 1.16% to $570.40, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
