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Gold prices paused after recording new highs in December, before targeting new highs in 2024.
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Geopolitical conflicts and historical trends point to a favorable period for gold prices between November and the end of February.
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Explore different ways to invest in gold, with a particular focus on the use of funds and ETFs, and identify the best options in this regard.
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It rose to 2,100 in December, exceeding the highs recorded during the pandemic, and closed 2023 trading with a notable gain of +13%, marking its best performance since 2020.
As of now, the yellow metal appears to be taking a brief pause to gain momentum before targeting new highs in 2024.
Factors favoring gold include:
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The Fed is expected to cut rates this year, likely after May, as suggested by Cleveland Fed President Loretta Mester, who expects rate cuts of a quarter of a percentage point in the fiscal year.
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Central bank gold demand has reached near-record levels, with annual net purchases of 1,037 metric tons approaching the 2022 record, down just 45 tons.
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Chinese household demand is expected to increase, having risen by 24% to reach a record level of $56 billion in 2023. The Year of the Dragon, which begins on February 10 with 16-day celebrations, is likely to set a new record for demand. . Gold is considered a symbol of good luck and is often purchased as a holiday gift during this period.
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Geopolitical conflicts, such as the conflict between Hamas and the potential involvement of Iran, along with the escalating war between Russia and Ukraine.
Historically, gold prices tend to perform best between November and the end of February, with three of the four best monthly results typically occurring during this period, while March is often the least favorable month.
In the chart above, we can see how the yellow metal failed to break higher every time it encountered major resistance.
Below, you can see its upward trend from a long-term perspective.
What is the best way to invest in gold?
There are several ways to invest in gold. Here are the most common ways investors tend to gain exposure to the yellow metal:
Buying physical bullion incurs economic costs and lacks liquidity, while also exposing risks such as theft.
Buying stocks involves investing in mining companies, which requires operating costs along with time-consuming tracking and analysis efforts.
The use of derivatives, such as futures and CFDs, is suitable for short-term trades and taking advantage of market downturns. However, the possibility of huge losses is very high due to leverage.
Specialized instruments such as mutual funds and ETFs provide an alternative. Among these funds, ETFs are particularly attractive due to their minimal economic costs and do not require significant time or effort. Investing in a gold ETF also ensures participation in a product that reflects the performance of gold.
In the case of ETFs, they stand out as the ideal choice, characterized by low economic costs, minimal time and effort requirements, and a guarantee of replicating gold price movements.
A gold exchange-traded fund (ETF) is a fund consisting of a single asset: gold. This exchange-traded fund is traded like any other stock, and derives its value from holding underlying assets that focus on the precious metal.
So which gold ETFs are best?
This is the largest gold ETF with over $57 billion under management. It was launched in November 2004 with a fee of 0.40%. Its return over the past five years is 9.60%.
Exchange-traded funds (ETFs) have performed 12% over the past year. The expense ratio is 0.09%, and the fund does not provide an annual dividend return. IAUM has accumulated $1.2 billion in assets under management since its inception on June 15, 2021.
This ETF had a one-year performance of 12%, with an expense ratio of 0.10%. Exchange-traded funds do not provide an annual dividend yield. Currently, GLDM manages assets worth $6.1 billion, and was launched on June 15, 2018, by the World Gold Council.
Exchange-traded funds (ETFs) have performed 12% over the past year. It features an expense ratio of 0.18% and does not offer an annual dividend yield. The ETF has accumulated $607 million in assets under management since its inception on June 27, 2018. It is issued by Goldman Sachs.
2024-02-08 12:36:00
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