The gold price has surged higher this week amid rising conflict in the Middle East.
Gold lifted after US President Donald Trump called for the immediate evacuation of Tehran.
The US President called for an evacuation of the Iranian capital on social media after he urged Iran's leadership to sign a deal to limit its nuclear program.
According to Bloomberg, gold rose 0.4% to top US$3,400 an ounce last night. This followed a 1.4% slide on Monday, which was the biggest daily decline in a month.
Gold shot up 4% last week after Israel had launched a strike on Iran's nuclear facilities. This has sparked fears of a wider regional conflict.
There is potential for Iran to close the Strait of Hormuz, a key shipping passage that transports around 20% of the world's oil. Experts have warned that any disruptions could cause financial turmoil.
Historically, gold has been seen as a safe-haven investment and hedge against geopolitical conflict. Amid sustained geopolitical conflict in the Middle East and Ukraine, gold has risen more than 45% in the past year.
The precious metal now sits around US$100 short of its all-time high set back in April. Further escalation could be the catalyst for a new all-time high.
How can ASX investors buy gold?
The easiest way for ASX investors to buy gold is through ASX exchange-traded funds (ETFs). These funds provide exposure to the performance of gold without needing to buy and store physical gold bars. Gold ETFs are purchased just like any other ASX share and charge a relatively small management fee.
The Betashares Gold Bullion Currency Hedged ETF (ASX: QAU) is backed by physical gold bullion bars held in a vault of JP Morgan Chase in London, hedged for currency movements. The management expense is relatively low (given the nature of the ETF), at 0.59% per annum.
As expected, the QAU ETF has roughly performed in line with the gold price over the past year, rising 44%, compared to 45% for the gold price.
Another option is the Vaneck Gold Bullion ETF (ASX: NUGG), which gives investors an investment in Australian-sourced gold. Units in NUGG can also be converted into physical gold bullion, if the investor chooses.
Over the past year, the NUGG ETF has outperformed the QAU ETF, rising 47% compared to 44%. The NUGG ETF also charges a lower management fee of 0.25%, which may be especially appealing to investors.
