Insider Monkey
10 Best Gold ETFs To Buy Now
Hamna Asim
9 min read

In This Article:

In this article, we discuss 10 best gold ETFs to buy now. If you want to skip our discussion on the gold industry, check out 5 Best Gold ETFs To Buy Now. 

In late 2023, gold prices experienced a significant surge due to increased central bank buying and growing investor concerns over geopolitical tensions including the Israel–Hamas and Russia–Ukraine conflicts. This rally was further fueled by a weakening US dollar and expectations of interest rate cuts by the Federal Reserve. Gold prices reached a record high of $2,135.39 per ounce in December. After continuous interest rate hikes that brought the Federal Reserve funds rate to its highest level in over 22 years, policymakers have signaled plans for at least three rate cuts in 2024. Natasha Kaneva, Head of Global Commodities Strategy at J.P. Morgan, commented: 

“Commodities are unlikely to benefit from core inflation in 2024. Inflation should fall to under 3%, so that, along with properly timing the business cycle, are the two conditions needed to initiate long positions, making the outlook for the sector very tactical in 2024. Across commodities, for the second consecutive year, the only structural bullish call we hold is for gold and silver.”

Reflecting similar market sentiment, Gregory Shearer, Head of Base and Precious Metals Strategy at J.P. Morgan, stated: 

“Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing an entry will continue to be critical. At the moment, gold still appears quite rich relative to underlying rates and foreign exchange (FX) fundamentals, and still looks vulnerable to another modest retreat in the near-term, as Fed rate cut expectations are now running earlier than our forecasts.”

In 2023, gold showcased strength despite expectations, outperforming multiple assets including commodities, bonds, and most stock markets. The World Gold Council highlighted that market consensus leans towards a 'soft landing' in the US, historically not favorable for gold returns, although geopolitical tensions and continued central bank buying may provide support. However, the possibility of the Fed achieving a soft landing with interest rates above 5% remains uncertain, with a global recession still possible, prompting investors to consider gold as an effective hedge. While the odds favor a soft landing, historical data shows it has been achieved only twice following nine tightening cycles, indicating potential challenges. The World Gold Council noted that the labor market's status is crucial in determining economic conditions, with potential shifts from a soft to a hard landing. Other possible scenarios include a 'no landing,' characterized by reaccelerated inflation and growth, which could initially challenge gold. Expected policy rate easing may not translate as favorably for gold due to factors like real interest rates and consumer demand constraints. A recession, if it occurs, historically benefits high-quality government bonds and gold, though initially, it might pose challenges for gold. However, if inflation surges, it could lead to a stronger monetary response, reinforcing the case for strategic gold allocations.

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