Why Investors Shouldn't Bail on Gold ETFs in the Long Term
In 2025, gold experienced a remarkable rally, climbing 32.22% in six months and surging 67.42% over the year. Rising central bank buying, economic uncertainty due to geopolitical and tariff tensions, Fed rate cuts, increased ETF inflows and a weaker dollar in 2025 helped make gold a top investment choice.According to LSEG Lipper data, as quoted on Reuters, investor appetite for gold and precious metals funds remained robust for eight weeks, with $2.03 billion flowing in during the final week of 2025. However, gold prices pulled back slightly on Wednesday as investors booked profits and CME Group raised futures margins again within the week, per a CNBC article.Yet, the underlying fundamentals support a potential gold rally in 2026, with most analysts projecting $4,000-$5,000 per troy ounce. According to Investopedia, central bank demand remains robust, as according to the World Gold Council, 95% of central banks plan to boost reserves in 2026.Per the above-mentioned Investopedia article, gold forecasts remain bullish. Goldman Sachs targets $4,900 with potential upside if investors reallocate more into gold ETFs. State Street has a price target of $4,000-$4,500, noting that strategic reallocations and geopolitical factors could push gold to $5,000. Additionally, the World Gold Council outlines four scenarios, with only one suggesting a price decline.Gold’s strong momentum from 2025 is expected to carry into 2026, though at a slightly slower pace. While a repeat of last year’s stellar rally is unlikely, the upside case remains intact, supported by solid fundamentals and a constructive long-term outlook. Let us look into why staying invested in gold still makes sense.Gold Positioned to Gain From Fed Rate CutsAnticipation of more Fed rate cuts in 2026 as the Fed signals further easing, along with forecasts that the next Fed chair may favor easing, are encouraging for investors anticipating lower rates. According to Mark Zandi, chief economist at Moody’s Analytics, as quoted on CNBC, weak labor markets, inflation uncertainty and political pressures may drive the Fed to aggressively cut rates in early 2026, expecting three-quarter-point cuts before mid-year.The greenback's value tends to move inversely with interest rate adjustments by the Fed. Interest rate cuts by the Fed make the dollar less attractive to foreign investors, as this weakens the U.S. dollar. Expected rate cuts and a weaker dollar should continue to support the upward trend in gold. A weaker U.S. dollar generally leads to higher demand for gold, increasing its price as it becomes more affordable for buyers holding other currencies.AI Bubble Concerns Keep Investors Interested in GoldGold continues to serve as an effective diversification tool for tech-heavy portfolios. While fears of an AI bubble have eased somewhat, concerns over elevated valuations and concentrated technology exposure persist, prompting investors to look beyond tech. This shift is sustaining interest in precious metals, particularly gold, which stands out as a reliable alternative amid ongoing market uncertainty.Volatility Picks Up, Gold Remains in DemandGold’s safe-haven appeal remains intact, providing a crucial hedge against rising macroeconomic and geopolitical risks. The CBOE Volatility Index, which reflects market expectations of near-term volatility conveyed by S&P 500 Index option prices, has gained 9.7% since Dec. 24, 2025, signaling an increase in market volatility.Building Gold Exposure With ETFsIn the current market backdrop, frequent short-term volatility can limit the effectiveness of active investing, strengthening the case for a long-term passive approach that helps investors stay resilient through market disruptions. With supportive fundamentals pointing to further gains next year, the case for increased portfolio exposure continues to strengthen.Investors should not be discouraged by any near-term pullback in gold prices, as the fundamentals underpinning the rally remain strong. Instead, they should adopt a "buy-the-dip" strategy to build exposure through gold ETFs.Gold ETFs to ExploreBelow, 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, iShares Gold Trust IAU, SPDR Gold MiniShares Trust GLDM, abrdn Physical Gold Shares ETF SGOL and iShares Gold Trust Micro IAUM to increase their exposure to the yellow metal.With a one-month average trading volume of 10.4 million shares, GLD is the most liquid option. GLD has gathered an asset base of $149.43 billion, the largest 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 Miners ETFsThese 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, Sprott Gold Miners ETF SGDM, VanEck Junior Gold Miners ETF GDXJ and Sprott Junior Gold Miners ETF SGDJ.With a one-month average trading volume of 20.89 million shares, GDX is the most liquid option. GDX has also gathered an asset base of $26.11 billion, the largest among the other options. Regarding annual fees, SGDM and SGDJ are the cheapest options, charging 0.50%.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>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 Reports VanEck Gold Miners ETF (GDX): ETF Research Reports VanEck Junior Gold Miners ETF (GDXJ): ETF Research Reports Sprott Gold Miners ETF (SGDM): ETF Research Reports Sprott Junior Gold Miners ETF (SGDJ): ETF Research Reports SPDR Gold MiniShares Trust (GLDM): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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