Google Searches for Gold Surge as Prices Spike

Written by: Hal Cook | Hargreaves Lansdown

• There were 271,500 Google searches for ‘gold’ in the first three months of the year.

• This is the most popular quarter since Q4 2020 – on the back of a rally in the gold price.

• Gold prices hit a record high of $2,355 on 8 April 2024, as China continued buying for its reserves.

• There are a number of factors helping to boost the price.

• Three fund ideas to get gold exposure. 

It’s no wonder that interest in gold has spiked online. It has hit yet another record high as a number of factors have combined to push prices up.

China’s buying spree sparked this new high. It’s one of a number of central banks buying gold, and has been doing so for the best part of a year and a half. However, this is just one factor of many pushing prices up. 

Heightened global geopolitical risk is another major factor. This will increase demand for Gold as it’s considered a ‘safe haven’ investment. Despite intensified efforts to demand a ceasefire in Gaza, the lack of any clear progress means concerns are running high. This has increased demand, which is supporting the gold price. 

Real interest rate expectations (interest rates that account for inflation) have fallen recently because of the potential for interest rate cuts to continue, but there are fears that inflation might be more sticky and/or increase a little from current levels, especially in the US. Historically, the gold price has moved in the opposite direction to real rates, especially when real rates fall because inflation has increased.  

Towards the end of 2023, the big question was whether the gold price would stay about the $2,000 level. However, it hasn’t just stayed above this level, it has continued to rally. Perhaps it will be the $2,500 dollar level which might act as a new technical limit for traders. Only time will tell, but with heightened geopolitical risk, central bank buying and the potential for inflation to tick up a bit more from here, it feels unlikely that the rally will end anytime soon. 

Investing in gold 

When the stock market is performing poorly, investors will often use gold to help diversify their portfolios. This is because the price of gold can behave differently to shares. 

Gold is a finite resource. The relatively fixed supply (it takes time to find and dig up) means that prices are very sensitive to demand. This means that the price of gold doesn’t always move in the same direction as share prices. In fact, quite often it will increase in price when share prices fall. But of course, this isn’t guaranteed. 

The reason the price can move in different directions is because when things become uncertain in stock markets, investors sell shares and want to buy something with a value that’s considered ‘safer’. Gold’s a popular choice because it’s recognised globally as something of value. It’s also highly liquid, so you can buy and sell it quickly and cheaply. So, it can be a useful diversifier in a portfolio, particularly during periods of market stress.

But it does come with risks. Prices can sometimes be volatile, affected by things like natural disasters, political tensions, or wider economic events like supply constraints.

3 fund ideas to get gold exposure

Ninety One Global Gold

The Ninety One Global Gold fund aims to deliver growth over the long term by investing in companies around the world involved in gold mining. It also has a small amount, around 10% of the fund, invested in other precious metals, like silver and copper.

The fund is run by industry veteran George Cheveley. He’s been working in the industry for over 30 years and is a specialist in metals and mining. He aims to invest in high-quality companies that are generating strong cashflows and delivering a better return on capital than their peers.

Almost half of the fund is invested in Canada, with the country home to almost half of the world’s publicly listed mining and mineral exploration companies. But the fund also invests globally, from the US and the UK to Australia and South Africa.

The fund is concentrated and has the flexibility to use derivatives, both of which add risk. As this is an offshore fund, you’re not normally entitled to compensation through the UK Financial Services Compensation Scheme.

Troy Trojan

If you want a fund that has some exposure to gold, but as part of a more diversified fund, this could be a good option.

Troy Trojan aims to grow investors' money steadily over the long run. It tries to limit losses when markets fall, rather than trying to perform strongly at all times.

Gold typically makes up around 10% of the fund and is one their four 'pillars’ of investment. The managers invest in both physical gold and gold-related investments like companies whose fortunes are strongly linked to the gold price. 

While this fund isn’t specifically a gold fund, it does consistently provide meaningful exposure to it. The managers will also change how much they invest in gold based on their level of conviction in the yellow metal compared to other asset classes. 

While the fund contains a diverse range of investments, it’s concentrated. This approach means each investment can contribute significantly to overall returns, but it can increase risk. The fund can also invest in smaller companies, which adds risk. 

iShares Physical Gold ETC

Finally, investors can use an exchange traded commodity (ETC). These can be a simpler and more convenient way for investors to access specialist areas like gold. These investments are bought and sold the same way as shares and aim to track the performance of the commodity. 

Some ETCs invest in the physical commodity, where the manager handles transportation, insurance and storage costs. Others use derivative contracts to artificially replicate the performance of the commodity, without having to own it. This saves on costs, but it’s a higher-risk approach. 

The iShares Physical Gold ETC tracks the gold spot price. This is the current price in the marketplace at which a given security, commodity or currency can be bought or sold for immediate delivery. 

This ETC only accepts gold that meets the London Bullion Market Association (LBMA) Good Delivery rules. In-line with these rules, the bars also aim to comply with LBMA’s Responsible Sourcing Programme, making sure that 100% of the gold bullion backing the ETC is responsibly sourced. 

With an ongoing charge of 0.12%, it’s also competitively priced in the market versus its competitors. Part or all of the annual charge is taken from capital, increasing the potential for your investment’s capital value to be eroded. This fund uses derivatives which can add risk.”

Related: Gold Price’s Relentless Rally