Australian investors are on track to channel over $1 billion into gold exchange-traded funds (ETF) this year, potentially approaching the record $1.3 billion allocated in 2020, according to Marc Jocum, Global X senior product and investment strategist.
“With bond real yields easing and the US dollar softening, investors are turning to gold as both a hedge and a store of value as speculation grows of a US rate cut grows, with the market now pricing in a 90 per cent chance of a September rate cut with persistent geopolitical risks and strong safe-haven demand also supporting gold,” Jocum said.
He highlighted “increasing speculation” that gold could test the US$4,000 level as early as next year, implying a further 15 per cent upside from current levels, with some analysts even forecasting the precious metal could climb as high as US$4,350 by end of 2026.
The World Gold Council last week saw gold surge on the strongest weekly ETF inflows since mid-April, driven by rising bets on a Fed rate cut, even as mixed global economic data – including stronger US Q2 growth, stable July PCE, modest Chinese PMI gains, and accelerating Indian gross domestic product – sent major equity markets mixed, Treasury yields down, and the dollar weaker.
Elaborating on this, Jocum said: “Gold is not just benefiting from safe-haven demand.”
Instead, he explained, investors are reallocating towards real assets, increasingly using ETFs to gain exposure.
“Despite doubling since 2023, Global X believes gold still has room to run on dovish Fed expectations, lower real yields, and rising geopolitical risks. We still believe we are in a secular bull market for gold,” he said.
Global X’s gold suite of ETFs attracted $57 million in inflows in August, bringing net flows to $364 million so far this year. Most of this ended up in the firm’s flagship product, the Global X Physical Gold ETF (GOLD), while its newer currency-hedged offering (GHLD) also gained traction.
“We anticipate this to be one of the best years for Global X’s gold suite of ETFs, following 2020’s large $826 million in yearly net flows,” Jocum said.
This has coincided with a recent rally in VanEck’s Gold Miners ETF (GDX), which rose by 19.7 per cent in August to exceed $1 billion in assets under management and become the month’s top-performing ETF.
VanEck Asia-Pacific’s chief executive and managing director, Arian Neiron, said gold mining equities have outperformed peers in the mining industry for two reasons.
“The first has been the accelerating demand for gold,” he said, adding that rising macroeconomic and geopolitical uncertainty has fuelled a significant lift in global demand from both central banks and investors.
“The second tailwind has been the strong operational performance of gold mining companies, as demonstrated in the recent earnings seasons,” he said, pointing to GDX’s largest holding, US-based Newmont Corp, which recently reported all-in sustaining costs of US$1,620 per ounce, and an expectation to deliver 5.6 million ounces of gold by year-end.
With gold trading at just under US$3,500 per ounce, margins remain strong, according to VanEck.
“We think gold mining companies still have room to move, notwithstanding the recent post-earnings uplift across the board,” Neiron said.
“Gold mining equities continue to be undervalued on a price-to-earnings basis, which means we could see significant price appreciation when valuations catch up to fundamentals.”
He added that should the gold price continue to climb, gold miners have even more to gain, given the typical leveraged effect on returns.
“The sensitivity to gold price movements over the last 10 years has been 2.029x. In other words, a 1 per cent increase in the price of gold should drive a 2.029 per cent increase to gold miners,” he said.
Looking ahead, the World Gold Council said US economic and jobs data, including ISM PMIs and non-farm payrolls, could influence safe-haven demand for gold, while uncertainty over US President Donald Trump’s attempt to dismiss Federal Reserve governor Lisa Cook and ongoing legal disputes over US tariffs may continue to weigh on market sentiment.
Speaking at the Australian Wealth Management Summit last month, UBS Global Wealth Management Australia chief of investments Andrew McAuley said UBS views gold as a good “geopolitical hedge” in the current economic environment and currently holds around 2 per cent in its portfolios.
“Gold has proven itself over and over again. Back in 2022, there was a large sell-off when yields rose as much as they did but that’s what you’d expect. We’re currently seeing central banks diversify away from US Treasuries and they’re buying gold, particularly with the Chinese,” McAuley said.
He also noted that gold was a relatively finite commodity and was becoming harder to find, similar to copper.
“It enables the store of value for when inflation rises,” he said.
UBS recently revised its target price for end-March 2026 to US$3,600 per ounce on the back of persistent US macroeconomic risks.
