Inflation fears are once again swirling on Wall Street after the Consumer Price Index (CPI) jumped 2.9% year-over-year in December. The 10-year Treasury yield (ZNH25) is flirting with 5%, and President-elect Donald Trump is about to take office for his second term in the White House. Investors looking to make sense of this noise may find an answer in a sparkling spot, gold (GCG25).
As Barron’s recently wrote, gold has a complex relationship with inflation. Investors flock to it as a hedge, but when bond yields are up, they will pursue bonds instead.
However, Goldman Sachs thinks this time may be different. Analysts recently reiterated their $3,000-per-ounce target, extending the timeline for the precious metal to reach this mark to mid-2026. They maintain gold prices can still gain 10% from here, after gaining 27% since the start of 2024. Geopolitical unrest, Trump’s policy agenda which favors safe-haven investments, and still-high inflation will continue to support gold despite rising 10-year yields.
Given this context, the SPDR Gold Shares ETF (GLD) appears particularly attractive for anyone looking to capitalize on this potential gold rally.
Let’s examine this ETF and what it has to offer.
Overview of SPDR Gold Shares (GLD)
Since its launch in November 2004, the SPDR Gold Shares ETF (GLD) has glittered on Wall Street. With an impressive portfolio that has nearly $75 million in assets under management, it provides investors with an accessible and efficient way to gain exposure to the price of gold, making it a preferred choice for those seeking stability and value in their investment strategies.
The fund’s primary focus is simple: Giving investors direct exposure to physical gold. It holds gold bars safely stored in vaults run by HSBC and JPMorgan Chase. Each share of the exchange-traded fund represents one-tenth of an ounce of gold, making it easy to follow gold’s price movements without dealing with the hassle of storing the metal yourself.
By mid-January 2025, GLD’s share price hit $247.03, capping off an impressive performance across various timeframes. The fund started 2025 with a solid 3% gain, building on its remarkable 31% rise over the past year. The GLD ETF is outperforming the S&P 500 Index ($SPX) in 2025, as the benchmark stock index is up just 1.29% in the YTD.
The fund tracks the LBMA Gold PM Price Index with a full 100% allocation, keeping its approach clear and focused. Its structure as a grantor trust ensures that trustees can’t lend out the gold bars, adding an extra layer of security for those holding shares. With a 0.4% management fee, or $40 on an initial $10,000 investment, GLD offers a cost-effective alternative to storing and insuring physical gold on your own.
Efficiency is another key strength of GLD. Authorized participants handle baskets of 100,000 shares to keep trading smooth and prices consistent. This setup, combined with GLD’s large market presence, helps maintain tight bid-ask spreads and excellent liquidity, making it easy to trade at any scale.
The ETF sticks to holding 100% physical gold, staying true to its straightforward goal. This pure focus has been especially useful during uncertain times, as gold typically doesn’t move in sync with traditional assets like stocks or bonds. This makes GLD a reliable option for those looking for stability when markets get rocky.
Catalysts Driving Gold’s Next Bull Run
Goldman Sachs’ optimistic gold forecast is backed by some strong and clear catalysts, starting with the unprecedented demand from central banks. These institutions are on a gold-buying streak, with purchases expected to average 38 tons per month through mid-2026. This steady appetite, especially from emerging markets, has changed the way gold typically reacts to rising interest rates.
Adding to this momentum is the Federal Reserve’s expected shift in monetary policy, which is setting the stage for gold prices to climb even higher. The Fed’s anticipated rate cuts amounting to 75 basis points in 2025 could give gold an extra boost as the year unfolds.
The political environment is also playing a big role. With uncertainty surrounding the incoming Trump administration’s policies, including possible new tariffs and concerns over U.S. fiscal stability, central banks are taking precautions. Many are diversifying into gold as a safeguard. This shift reflects growing doubts about the dollar’s dominance in global finance.
China’s demand for gold is another major factor driving prices up. The People’s Bank of China resumed its gold purchases recently, adding 5 tons in November alone. Retail demand remains strong, with China’s jewelry market consuming 373 tons in just three quarters of 2024. This combination of institutional and consumer buying continues to push prices higher.
Goldman Sachs analysts Daan Struyven and Lina Thomas now predict gold will hit $2,910 by the end of this year and could reach $3,000 by mid-2026. Their forecast isn’t just based on technical trends but also on fundamental changes in how central banks and global markets view gold during times of economic uncertainty.
Supporting this outlook, CPM Group expects a 13% rise in gold prices to an average of $2,730 per ounce this year, with sharp gains likely in the first quarter before a brief slowdown in the second quarter. These interconnected factors make a strong case for adding exposure to the GLD ETF now.
Conclusion
The verdict is clear: GLD stands out as a prime buying opportunity while 10-year yields hover near 5%. With Goldman Sachs’ bold $3,000 gold price target, robust central bank buying, and an expected shift in Fed policy, the stars are aligning for this gold ETF. The fund’s stellar 31% gain over the past year could be just the beginning of a larger rally. For those seeking a hedge against uncertainty while maintaining liquidity, GLD offers a compelling way to gain exposure to gold’s potential upside.
