Global X launches gold-backed ETF

Global X has launched the Global X Gold Bullion ETF, expanding the company’s range of gold-backed products.

GXLD will complement Global X’s flagship product, Global X Physical Gold (ASX: GOLD), and aims to replicate the movements in the Australian dollar price of gold, less the annual management fee, by investing in physical gold bullion bars.

The ETF provider said that, with a management fee of 0.15 per cent per annum, GXLD marks the lowest-cost, physical-backed gold ETF in the Australian market and represents the latest achievement in its “pioneering” history in gold-backed ETFs.

Chief executive Evan Metcalf said: “As the largest and most liquid gold-backed exchange-traded product in Australia, our flagship product GOLD is valued by our clients, especially for investors prioritising transaction costs and liquidity.”

“GXLD allows us to deliver the same value to investors looking to invest in gold over the longer-term. GLXD’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.”

Expounding on this, Metcalf said this presents a promising opportunity for investors who want to capitalise on the enduring value of gold, based on what is best suited to their unique portfolio needs.

Namely, gold prices have surged 20 per cent over the past two months to record highs above US$2,400 ($3,754) an ounce despite recent challenges like elevated real bond yields and a robust US dollar, which historically have worked against gold’s favour.

Senior product and investment strategist, David Tuckwell, said the surge has largely been driven 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,” Tuckwell explained.

“Although the gold price has seen a small correction in recent weeks, looking into the second half, Global X believes gold prices are well supported.

“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 concluded.

Notably, recent quarterly data suggests Australians resisted buying into the gold rally, unlike their peers in Asia.

Global demand, excluding off-exchange trading or over-the-counter transactions, fell 5 per cent to 1,102 tonnes in the first quarter of 2024, according to the World Gold Council’s latest Gold Demand Trends report.

Consumption in Australia dropped to record lows, falling 37 per cent from Q1 2023, with the country deemed an “outlier” in Asia.

However, this decline in demand among Australians didn’t exactly reflect on their interests in gold exchange-traded funds (ETFs), he said, noting a more modest decline as Aussies held their gold ETFs relatively steady.