ETFs, Investments

New avenue to gold opened

Gold bullion ETF exchange traded fund Global X

Global X has broadened its presence in the local ETF market with the introduction of a second offering focused on physical gold.

Global X has launched its second exchange-traded fund (ETF) focused on physical gold bringing the total number of its offerings in the Australian market to 37.

The Global X Gold Bullion ETF (ASX code: GXLD) will track the performance of the price of gold bullion in Australian dollars by referring to the precious metal’s spot price, with the assets held in the vaults of JP Morgan Chase Bank in London.

According to the ETF provider, the offering is the lowest-cost physical-backed gold ETF in the local market, charging a management fee of 0.15 per cent of the fund’s net asset value annually, and is the firm’s second gold-backed fund, with its initial product launched in 2003.

“Our flagship product GOLD is valued by our clients, especially for investors prioritising transaction costs and liquidity,” Global X chief executive Evan Metcalf said.

“GXLD allows us to deliver the same value to investors looking to invest in gold over the longer term. GXLD’s lower management fee of just 0.15 per cent has the potential to translate into significant cost savings for these investors over long time horizons.

“This resilience presents a promising opportunity for investors. With the launch of GXLD, we’re excited to offer Australian investors a variety of choice that allows them to capitalise on the enduring value of gold, based on what is best suited to their unique portfolio needs.”

GXLD will provide investors with more options to benefit from the recent surge in gold prices, which have climbed around 20 per cent over the past two months despite factors such as high real bond yields and a strong US dollar typically considered unfavorable for the precious metal.

“The gold price has been driven up to record highs largely by central bank buying – particularly in China as it aims to diversify its reserves away from the US dollar. China has seen gold buying increase more broadly as investors seek out returns outside its underperforming equity and property markets,” Global X senior product and investment strategist David Tuckwell said.

Tuckwell noted while the price of gold has dipped slightly in recent weeks, its long-term outlook was still strong.

“Statistically, the best two predictors of the gold price are real yields on US government debt and the strength of the US dollar. With markets forecasting these to possibly fall late in 2024 or early in 2025, if history is any guide, we could be in for another leg up in the gold price,” he said.

The release of the gold bullion ETF follows the launch of Global X’s AI ETF last month.


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