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Gold prices have been hitting record highs lately, fueled by hopes that the Federal Reserve will start cutting interest rates soon. Lower interest rates reduce the opportunity cost of owning gold, thereby boosting its appeal, as the precious metal does not yield any income.

Gold purchases by central banks have soared in recent years, particularly following Russia’s invasion of Ukraine. Central banks made net purchases of 1,037 tons last year, according to the World Gold Council. The People’s Bank of China is among the central banks that have been buying gold to diversify away from the dollar.

Geopolitical tensions have been rising in the wake of the Russia-Ukraine war, the Israel-Hamas conflict, and the increasing risks of China’s invasion of Taiwan. Gold is seen as a safe haven in times of volatility and geopolitical stress.

Consumers in China have increased their gold purchases as they look for alternative investment options amid weak stock market returns and a prolonged real estate crisis.

India, the second-largest consumer of the metal, is also expected to see an increase in demand with rising consumer incomes as the economy continues to grow.

The SPDR Gold Trust (GLD - Free Report) is the most popular gold ETF. The SPDR Gold MiniShares Trust (GLDM - Free Report) and the iShares Gold Trust Micro (IAUM - Free Report) are ultra-cheap ETFs that are suitable for long-term investors.

The VanEck Gold Miners ETF (GDX - Free Report), the most popular gold mining ETF, provides leveraged exposure to the metal. To learn about these ETFs, please watch the short video above.

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