Gold prices surging, significant investments in Gold ETFs observed in recent times

The gold-backed exchange-traded fund (ETF), GLD, has seen a significant surge in assets under management since the beginning of the year. According to recent reports, the fund now boasts a record-breaking $113 billion in assets, more than doubling its value since 2020.

This remarkable growth has been accompanied by a 33% gain for GLD, reflecting the strong demand for the precious metal in the current market. The rally on Tuesday alone saw the ETF take in a staggering $1.45 billion - the largest daily inflow since March.

The SPDR Gold Shares, provided by State Street and traded under the ticker symbol "GLD", attracted the most money among all US-listed exchange-traded funds last week. This influx of funds has propelled GLD to the forefront of investment choices, particularly among institutional investors who value its liquidity.

The increased interest in gold can be attributed to a variety of factors. According to Todd Rosenbluth, head of research at TMX VettaFi, "Geopolitical uncertainties and inflation fears are driving people to seek safe havens, and gold is benefiting from that."

One of the key forecasts that has influenced this trend comes from investment bank Goldman Sachs. The bank's analyst, Samantha Dart, predicted that gold prices could surge to up to $5,000 per ounce amid fears about the Federal Reserve's independence and rising public debt in industrialized countries. Goldman Sachs warns that political interference, especially by former President Donald Trump’s attacks on the Fed, could cause massive shifts from US Treasury bonds into gold, driving prices sharply higher.

This potential shift from US government bonds into gold has been a significant factor in the recent surge in gold prices. In fact, Goldman Sachs announced that if investors shift a small portion of their US government bonds into gold due to fears about the Fed's independence, the gold price could rise to $5,000.

The metal remains one of the strongest performing commodities of the year, with investors putting more than $11 billion into GLD this year alone. This inflow surpasses the net inflow of 2020 by more than $10 billion.

In addition to GLD, another gold ETF from State Street, the SPDR Gold MiniShares Trust, recorded a record inflow of over $1.5 billion on Wednesday. The gold price, which hit a new high of over $3,570 per ounce yesterday, dipped today, but the trend remains bullish.

As geopolitical tensions and inflation fears continue to mount, it appears that gold will continue to be a preferred safe haven for investors. With its liquidity and strong performance, GLD remains the preferred vehicle for many institutional investors seeking to ride the gold wave.