Rising inflation is certainly producing a strong year for gold, translating into what could potentially be record-breaking average prices in 2022 for the precious metal. That said, gold exchange traded funds (ETFs) could see more strength ahead.
Per a Kitco News report, analysts from the U.K.-based precious metals research firm Metal Focus foresee gold prices to average the year around $1,830 an ounce. If it were to reach that price level, then it would mark a record high average price.
“Even though an increasingly hawkish Fed, a rising dollar and a wider sell-off in assets then weighed on gold, the price in early June is trading close to its level at the start of the year, outperforming equities and bonds,” wrote Neil Meader, Director of Gold and Silver at Metals Focus in the report.
Other factors like the potential of a recession could spur even more demand for the precious metal. However, inflation could cool down, and thus, rate hikes could subside, which offers a potential headwind for higher gold prices.
“As policy rates rise and inflation declines, we expect that real rates and yields will rise materially during the second half, putting pressure on the gold price,” Meader added.
Getting Gold Exposure
Investors still looking to get gold exposure can use ETFs as a dynamic investment vehicle to add precious metals to a portfolio. The abrdn Physical Gold Shares ETF (SGOL), for example, seeks to reflect the performance of the price of gold bullion.
Fund facts: per SGOL’s fact sheet:
- Physically-Backed: The Trust holds allocated physical gold bullion bars stored in secure vaults.
- Transparency: The metal is held in allocated bars and a bar list is posted daily on abrdn.com/usa/etf.
- Pricing: The metal is priced off the London Bullion Market Association’s specifications for Good Delivery, which is an internationally recognized and transparent benchmark for pricing physical gold.
- Vault Location: Metal is held in Zurich, Switzerland and London, England in a secured vault.
- Vault Inspection: Inspectorate International, a leading physical commodity auditor, inspects the
vault twice per year (including once at random).
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