Gold investments certainly had a great year in 2024, breaking into new all-time highs due to macro factors and investor demand.
Before 2024 closed out, UBS released an insight piece on how gold may perform in 2025. In the article, the UBS team highlighted a variety of factors that could work in gold’s favor.
To start, UBS highlighted how central banks around the globe are continuing to build up their gold reserves. Going further, UBS anticipated that central banks could even buy more than 900mt of gold this year.
Plenty of domestic factors are also supporting the use case for gold. Namely, the uncertainty of future U.S. federal policy may bolster gold’s value as a hedge. This doubt extends to current international conflicts as well
“With the Russia-Ukraine war still ongoing, and the situation in the Middle East no less complicated, we think investor demand for hedges should rise further, boosting inflows to gold exchange-traded funds,” UBS added.
Additionally, the Federal Reserve’s rate cutting regimen should make it easier for investors to buy and hold their gold exposure. Lower rates and a potentially weaker U.S. dollar could do wonders to balloon gold prices throughout 2024.
For investors looking to add more gold exposure to their portfolio, ETFs can certainly help. Gold ETFs in particular may offer an easier means for investors to bolster their exposure to this valuable commodity. This is due in part to the flexibility and potential tax-efficiency provided within the ETF wrapper.
As such, gold ETFs remain one of the more popular means for traders to stay connected to gold. For instance, the SPDR Gold Shares (GLD ) currently holds more than $74 billion in assets under management.
Whether traders wish to ride the returns or simply build up a hedge, gold ETFs will remain a valuable choice this year. As such, it may be prudent to get in on gold before more macro factors begin to shape gold’s performance for 2025.
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