It’s been a stunning rally for gold this year, with the yellow metal surging 20% from the end of December to last week’s peak of $1,279.60 an ounce. It is easy to understand why gold was gaining in the beginning of the year, given the slump in oil prices, weak global economy and volatility in the broader markets. Gold has always been held as a safe-haven asset when the stock markets are subject to gyrations.

But the markets have started showing signs of stability as oil prices moved north since Feb 11. Yet, gold continued to shine, finishing last week at a 13-month high and climbing more than 10% in February. Major fundamental issues like demand surpassing supply, higher inflation rate and rate hike uncertainty in the U.S., and concerns about negative interest rates in Japan and Europe had increased the allure for gold.

Gold prices, however, logged its third straight loss this week to settle at $1,257.40 an ounce on Wednesday. Expectations of additional stimulus measures by the European Central Bank boosted the euro, which eventually dulled the shiny metal’s investment appeal. Despite this hiccup, the aforementioned fundamental factors still make gold a bargain, especially after it had suffered for years in a bear market.

Furthermore, there is plenty of room for this metal to climb up. It is still trading at more than 50% below its all-time high of $1,920 an ounce in Sep 2011. Given that there is upside potential for gold, investing in mutual funds having a significant exposure to this metal will strengthen your portfolio.

Let us now look at the core issues that will drive this metal in the near term:

Demand Outstrips Supply

While the World Gold Council (WGC) had stated that output from gold mines was sluggish last year, it also reported that there is strong demand for gold in bullion coins and exchange traded funds like SPDR Gold Shares (GLD). Moreover, demand for gold in emerging countries including China and India remains healthy.

China’s gold imports soared from almost 119 tons in 2010 to 992 tons in 2015, according to the latest data from Hong Kong. John LaForge, head of Wells Fargo’s commodities team, further added that China consumes about 40% of the gold that is generated every year.

The WGC said that wealthy Chinese are mostly buying gold, resulting in huge demand for the metal. They were forbidden from buying gold from 1950 until 2004. The People’s Bank of China is also taking measures to buy gold to stabilize the value of the yuan, as more gold reserves increase yuan’s worth. In case of India, the WGC said that demand for gold in the country increased 2% to 848.9 tons last year from a year before.

Underlying Inflation Picks Up, Rate Hike Ambiguity

On the domestic front, the Commerce Department’s report showed a rise in inflation. The Fed’s preferred gauge, the personal consumption expenditures index (PCE), increased 1.3% in January from year-ago levels, the largest increase since Oct 2014. The so-called “core” inflation that excludes food and energy prices came in at a solid 1.7% in January, the largest increase since Jul 2014.

Rising inflation is expected to fuel gold’s surge. Gold is widely considered as a hedge against inflation. It protects against a fall in the value of the currency. For example, if you invest in a stock that gives you a 5% annual return, while the inflation rate is 6%, then in the long run you actually lose purchasing power.

Additionally, financial volatility at the beginning of the year has almost compelled the Fed to hold off any further rate hike this month. This is also good news for gold since in a higher interest rate environment the “opportunity cost” for holding the metal increases. Fed’s hike in interest rates results in bonds and dividend-paying stocks shelling higher rates as well.

Negative Interest Rates in Japan & Europe

A growing number of central banks across the world have introduced negative interest rates. Some of these names include The Bank of Japan, European Central Bank, Swiss National Bank and Sweden’s central bank. Helpless in stemming the global financial meltdown, the apex banks had little option but to take such a step.

However, these concerns turned out to be a blessing for gold as investors kept piling into this less risky asset class. Speculative interest in gold moved north from the start of the year. Eminent hedge-fund manager and founder of Greenlight Capital Re, Ltd, David Einhorn said in January that gold was among his biggest bets.

Top 5 Gold Mutual Funds to Invest In

With demand for gold remaining healthy amid listless supply, inflation picking up, slimming chances of an immediate rate hike in the U.S. and more central banks across the globe resorting to negative interest rates, the gold rush is expected to continue. Savvy investors should cash in on this bullish trend by investing in gold funds.

Here we have selected five such gold funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy), have positive year-to-date and 1-year return, offer minimum initial investment within $5000 and carry a low expense ratio.

American Century Global Gold A (ACGGX - MF report) invests a large portion of its assets in companies that are engaged in mining, processing, distributing and exploring gold. ACGGX’s year-to-date and 1-year returns are 38.5% and 9.5%, respectively. Annual expense ratio of 0.92% is lower than the category average of 1.44%. ACGGX has a Zacks Mutual Fund Rank #2.

Fidelity Advisor Gold A (FGDAX - MF report) invests the majority of its assets in securities of companies involved in gold-related activities and in gold bullion or coins. FGDAX’s year-to-date and 1-year returns are 37.2% and 15.6%, respectively. Annual expense ratio of 1.19% is lower than the category average of 1.44%. FGDAX has a Zacks Mutual Fund Rank #1.

Franklin Gold and Precious Metals A (FKRCX - MF report) invests a major portion of its assets in securities of gold and precious metals operation companies. FKRCX’s year-to-date and 1-year returns are 40.7% and 14.7%, respectively. Annual expense ratio of 1.09% is lower than the category average of 1.44%. FKRCX has a Zacks Mutual Fund Rank #2.

Van Eck International Investors Gold A (INIVX - MF report) invests a large portion of its net assets in securities of companies engaged in gold-related activities including exploration, mining or processing of gold. INIVX’s year-to-date and 1-year returns are 31.3% and 5.2%, respectively. Annual expense ratio of 1.43% is lower than the category average of 1.44%. INIVX has a Zacks Mutual Fund Rank #2.

Oppenheimer Gold & Special Minerals Y (OGMYX - MF report) invests mainly in common stocks of companies that are involved in mining, processing or dealing with gold. OGMYX’s year-to-date and 1-year returns are 33.3% and 9.1%, respectively. Annual expense ratio of 0.92% is lower than the category average of 1.44%. OGMYX has a Zacks Mutual Fund Rank #2.