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These Factors Could Make This Gold ETF Shine

BY | ETF Database
6:18 am ET 10/21/26 | 27 VIEWS
It may be of little comfort to jilted investors, but gold’s 2026 slump — one that has the SPDR Gold Trust (GLD B) down 5.3% year-to-date — is easily explained.The yellow metal’s 2026 tale of woe is largely an interest rate story. As in soaring U.S. Treasury yields against the backdrop of Federal Reserve tightening are diminishing the appeal of gold and related ETFs. That’s because those assets don’t pay dividends or interest. The Fed raised rates in September. And the case for another rate hike before the end of the year gained support this week amid a hotter-than-expected September reading of the Consumer Price Index (CPI). There’s a bright spot for gold and ETFs such as the Direxion Daily Gold Bull 2X ETF (UGLD B-). It’s that the pathways to a rebound are as easily spotted as are the factor’s behind the commodity’s 2026 slide. UGLD, which came to market in May, seeks returns corresponding with 200% of the daily performance of the aforementioned GLD. GLD is the largest ETF backed by physical bullion holdings.How UGLD Can Find a GrooveGold is likely to be tethered to interest rates over the near term. So some investors may be skittish about getting involved. “We remain cautious near-term as the macro environment remains [challenging. We] have an average 4Q26 forecast of [$4,000/oz. But we] then expect prices to average $4,813 in CY27,” said Bank of America in a recent report. However, there are reasons to believe UGLD can be useful to risk-tolerant traders and possibly over the near-term at that. For example, investment demand — by way of nonleveraged ETFs and global central banks –—remains steady. That indicates some market participants continue viewing gold as a reliable hedge against monetary debasement.Easy Catalyst?Monetary debasement could easily be a catalyst for UGLD. That’s because the reality is the U.S. carries more than $40 trillion in debt. And there’s no sign that figure will materially fall anytime soon. But even against that backdrop, it’s possible that at some note that in 2027, the Fed will seriously mull lowering rates. And that which could stoke a significant rally by gold and the leveraged UGLD. “Even though the US fiscal deficit is much discussed in the gold market, a higher term premia alone has usually not been bullish gold,” added Bank of America. “As such, if fiscal policy does not become more orthodox, we believe an end to the hiking cycle, or even more powerful, a return to concern over fiscal repression would be the more significant drivers. If the Treasury intervened in the bond market, financed that by issuing short-term debt and the Fed then made sure that short-date rates remained low, this would in all likelihood reignite concerns over USD debasement – a very bullish scenario for gold.” For more news, information, and analysis, visit the Leveraged & Inverse Content Hub.

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