SPDR Gold Shares ETF (GLD)
The SPDR Gold Shares ETF, traded under the symbol GLD, is an exchange-traded fund that tracks the spot price of gold. Unlike most other ETFs that hold a basket of securities, GLD invests in a single instrument – gold. Its aim is to provide cost-effective exposure to precious metals.
Managed by State Street Global Advisors, GLD was listed on the New York Stock Exchange Arca, the top US exchange for ETFs, in 2004. It was the first US-traded gold ETF and the first US-listed ETF backed by a physical asset. GDL is among the largest private holders of gold bullion worldwide. As of January 2023, it held 29.5 million ounces of gold, with a market value of USD 56.6 billion.
GLD has an expense ratio of 0.4%, a factor watched by investors, which shows how much of the fund’s assets are used to cover running costs. CFD traders that purely bet on price movements, but don’t own GLD shares, are not subjected to this cost.
GLD aims to track gold’s spot price as closely as possible. For this reason, the factors that affect its price are the same as the forces that make gold prices fluctuate, such as:
- Supply and demand
Gold supply shortage underpins gold prices. News on demand for jewellery, electronics, central bank reserves, and investments, such as exchange-traded funds (ETFs), would affect the price. - Fed rate policy
The US Federal Reserve's interest rates are crucial for the gold price. Higher interest rates reduce demand for gold, which pays no interest, pushing down its price. - The US dollar
Gold contracts are priced in US dollars, and for this reason, they move inversely to the greenback. - Economic or political instability
Gold is a safe haven and its price rises amid economic downturns, or political instability.
