Investors are flocking to the gold safe haven.
It is probably no coincidence that as the price of Bitcoin and tech stocks are falling or flatlining, the price of gold has surged to a record high of $2,960 per ounce this week.
Gold prices have shot up some 12% year-to-date, while Bitcoin is off about 8%, the Nasdaq Composite has dropped 3%, and the S&P 500 is basically flat YTD.
The reason, experts say, is the macroeconomic uncertainty that investors see right now. Tariffs, budget cuts, geopolitical tensions, rising inflation, an overvalued stock market, and a potential government shutdown battle looming, are all contributing to the uncertainty.
This has led more investors to rush to gold as a safe haven. They are looking to de-risk their portfolios from more speculative or volatile plays to something with the relative long-term stability of gold. It is also a hedge against inflation, as its value remains resilient when inflation erodes purchasing power.
Many Wall Street analysts expect the price of gold to surge even higher, particularly if the economic conditions worsen. Analysts at UBS set a price target of $3,200 for gold, while Goldman Sachs strategists bumped their target to $3,100 per ounce, with the potential to go to $3,300 if tariff fears remain heightened, according to Barron’s.
That is probably why gold-backed exchange-traded funds (ETFs) saw their largest inflows since March of 2022 last week.
Top gold ETFs
According to Reuters, gold ETFs brought in 52.4 metric tons of gold last week, valued at $5 billion. The new inflows, reported Reuters citing World Gold Council data, brought total holdings up 1.6% to 3,326 metric tons – the most since August 2023. U.S.-based gold ETFs led the way with 48.7 metric tons of inflows last week, Reuters reported.
Gold ETFs have performed well this year, with most of them beating the S&P 500 and other stock benchmarks.
One of the top performers is the Goldman Sachs Physical Gold ETF (CBOE:AAAU), which has returned 12.5% year-to-date and 44.7% over the past 12 months.
The Franklin Responsibly Sourced Gold ETF (NYSEARCA:FGDL) has had similar returns, up 12.1% YTD and 46% over the past year.
Another high-performing gold ETF is the VanEck Merk Gold ETF (NYSEARCA:OUNZ), which has gained 11.9% YTD and 44.6% over the past 12 months.
While gold is expected to continue to rally in the near-term, investors should be wary about gold eventually running too hot down the road.
“Looking back as far as the 1970s, the spread between the gold price and its 200-day moving average has rarely been as large as it is currently, in nominal dollar terms,” analysts at Heraeus said, reported Kitco News. “Each time it occurred – in 1980, 2011 and 2020 – the large spread was the result of an explosive rally, and preceded a multiyear bear market for gold.”
