Investors go for gold with allocations, prices set to rise

Despite some recent price concerns, the share of US investors holding gold in their portfolios has almost doubled this year compared to last year and sentiment is high according to a new report.

State Street Global Advisors says that 38% of investors who took part in its 2024 Gold ETF Impact Study said they have gold investments, up from 20% last year, while 56% of the cohort said they plan to increase allocations in the next 6-12 months.  

Investors’ favorite precious metal is expected to become even more precious over the year ahead with Goldman Sachs forecasting prices to rally to $3,000 an ounce, helped by Fed rate cuts, central bank gold purchasing, and the incoming Trump administration.

The SSGA study comes as its game-changing exchange-traded fund, SPDR Gold Shares (GLD), marks its 20th anniversary. The ETF was launched in partnership with the World Gold Council and remains the largest gold ETF in the world with more than $78.3 billion AUM.

"GLD has been instrumental in democratizing gold investing for a wide range of investors."  said George Milling-Stanley, chief gold strategist at State Street Global Advisors.

While the GLD fund has been around for two decades, many of the study’s gold-holding respondents are relatively new to the asset class with 40% having started investing in gold in the last five years.

Millennials are driving the demand with 61% of the generation having gold allocations in their portfolios compared to 35% of Gen Xers and 20% of Boomers. The younger group is also more likely to choose to invest in the metal through a gold ETF (54%) compared to 41% of Gen Xers and 21% of Boomers.

“This generational shift underscores gold’s appeal as both a strategic asset and a store of value, particularly among younger investors who are drawn to the accessibility and cost-efficiency of ETFs,” Milling-Stanley said.

SAFE HAVEN, STRONG PERFORMER

Gold remains a popular safe haven to hedge against market volatility (57% of gold investors said this) and inflation (51%). This is important today with 73% of respondents expecting increased market volatility over the next 12 months.

The metal is also considered a strong performer with 84% of respondents with gold ETF holdings saying it has helped boost the overall performance of their portfolio in 2024, up from 73% who said this in 2023.

Almost two thirds of gold ETF investors said the funds are a less expensive way to allocate to the asset than buying physical gold and 70% of financial advisors surveyed recommend gold ETFs when they suggest investing gold to their clients.

“We continue to innovate and evolve the gold market to shape what investing in gold will look like in the future," said Joseph Cavatoni, senior market strategist, Americas, World Gold Council. "Whether it's opening new channels for investors to access GLD or exploring new initiatives such as digitalization, we strive to expand avenues to gold investment for generations to come.”