Gold extends 2-year rally as 3 ETFs offer exposure at different risk levels

Gold has climbed for two consecutive years, drawing investors to three ETFs that offer varying degrees of exposure to the metal as geopolitical and macroeconomic uncertainty persists.

Gold traded at $4,529.30 an ounce, extending a two-year rally driven by central bank purchases, geopolitical turmoil and persistent inflation concerns. The metal has ground higher with occasional sharp pullbacks since mid-2024, supported by elevated physical demand from monetary authorities and safe-haven flows amid the US-Iran conflict.

"The initial safe haven demand in the conflict in West Asia has now been corrected and markets are increasingly following the monetary messages and risk sentiment of global markets," Colin Shah, managing director at Kama Jewelry, said.

Gold futures on the Multi Commodity Exchange fell Rs 259 to Rs 1,56,666 per 10 grams on May 29 amid profit booking, while international spot prices remained above $4,500. Silver traded at $76.96 an ounce, up 1.41 percent, according to market data. The rally has pushed gold toward its all-time highs, with Shah forecasting a move to INR 1,80,000 per 10 grams in India over FY26-27.

Three ETFs, Three Risk Profiles

For investors seeking gold exposure, three ETFs span the risk spectrum. The lowest-risk option tracks physical bullion directly, offering price exposure without mining company operational risk. A mid-tier ETF holds a diversified basket of senior gold producers, adding equity beta to the commodity price. The highest-risk vehicle focuses on junior explorers and developers, where leverage to the gold price is greatest but so is volatility.

Supply and Demand Backdrop

Central bank gold purchases remained elevated in 2025 and into 2026, with the People's Bank of China and the Reserve Bank of India among the largest buyers. Mine supply growth has been constrained by depleting reserves at mature operations and longer permitting timelines for new projects. On the demand side, jewelry consumption in India and China has softened as record local prices weigh on discretionary buying, though investment demand through ETFs and bars has increased.

The next catalyst for gold is the US-Iran ceasefire negotiations, which could either extend the rally if tensions persist or trigger a correction if a lasting peace deal restores risk appetite and reduces safe-haven flows. The metal's two-year advance has already outpaced the 10-year average annual return of roughly 8 percent, leaving it vulnerable to profit-taking at current levels.

This article is for informational purposes only and does not constitute investment advice.