ETF Investors Take Notice as Gold Hits Fresh Record High

Gold ETF flows are close to breakeven for the year.

The price of gold hit a fresh record high on Wednesday, topping $2,670 per ounce for the first time ever.

The precious metal is up a whopping 29% this year, fueling similar gains for ETFs that hold gold, like the SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU). 

Last week, analysts at Goldman Sachs reiterated their price target of $2,700 for gold, which they expect to occur in early 2025. The bank noted increasing gold demand and the likelihood of a U.S. central bank interest rate cut. The Federal reserve slashed interest rates a robust 0.5% last Wednesday. 

 At the current rate, it looks like yellow metal has a good shot at surpassing that target ahead of schedule. 

ETF Demand Strengthen

For much of the year, ETF investors have ignored gold’s ascent. Last month, I wrote that gold ETFs had seen year-to-date outflows of $3.2 billion. 

But as the price of gold has continued to surge, ETF investors have finally come around.

Year-to-date flows for the year are now close to zero thanks to strong inflows of $2.5 billion over the past month.

GLD and IAU have led the way, with one-month inflows of $1.7 billion and $446 million, respectively.

The SPDR Gold MiniShares Trust (GLDM) has also seen strong demand, with inflows of $151 million over that period.

GLDM’s expense ratio of 0.1% is the second-lowest among gold ETFs behind the iShares Gold Trust Micro (IAUM)’s 0.09%.

However, GLDM is much more popular than IAUM, with total assets of $9.2 billion versus $1.5 billion. Since the start of the year, GLDM has picked up inflows of $988 million versus outflows of $61 million for IAUM.

GLDM is now the third-largest U.S.-listed gold ETF by assets, only behind the $74.3 billion for GLD and the $31.4 billion for IAU.

IAU is the biggest flows loser among gold ETFs this year. Since the start of 2024, investors have taken $1.9 billion out of the fund.