The S&P/ASX All Ordinaries Gold (XGD) is an index designed to measure the performance of companies listed on the Australian Securities Exchange (ASX) that are involved in gold exploration, mining, or production. The companies are also classified as part of the GICS Gold sub-industry.
XGD Index Performance
The index is a subset of the broader All Ordinaries Index. It provides focused exposure to Australia's gold mining sector.
Gold has historically been viewed as a safe-haven asset, attracting investors during times of economic uncertainty or market volatility. Australia has a large number of gold mining companies as it possesses vast reserves of gold deposits. Australia is one of the world's largest gold-producing countries. Therefore, the index serves as a benchmark for the gold sector in Australia.
S&P/ASX All Technology Index Performance
With the price of gold rallying over the last couple of years, it is natural that the index has also performed strongly, climbing to a new all-time high in October 2024. After dipping, it is gaining once again and is not too far off its highest point. Here is the index's performance over recent years:
| Period | Total Return |
|---|---|
| 1-Year Return | +47.11% |
| 3-Year Return | +12.81% |
| 5-Year Return | +5.72% |
| 10-Year Return | +13.92% |
The index is rebalanced annually in March. The top 10 constituents account for approximately 78.1% of the index's total market capitalisation.
Gold Forecast
The Bull Argument: Goldman Sachs said in an article in late 2024 that it expects gold to climb higher than previously expected as central banks in emerging markets have ramped up purchases. In its 2025 forecast for the yellow metal, the investment bank told investors that it predicts gold will increase to $3,000 per troy ounce by the end of the year. “The relationship between changes in the gold prices and changes in interest rates still exists, but sizable central bank purchases of gold bars have reset the relationship between rate and price levels since 2022,” said the bank, adding that it estimates that 100 tonnes of physical demand lifts gold prices by at least 2.4%.
The Bear Argument: Given the rise in the precious metal over the last couple of years, there are not too many bearish assessments of gold at the moment. However, Fitch Ratings currently has a $2,100 price assumption for gold at the end of 2025 and an assumption of $1,800 by the end of 2026.
Investors should consider the relationship with bond yields. Gold has a negative correlation with bond yields. However, this has not been so strong over the last year. However, if it were to snap back into place, investors should consider how it may impact gold going forward. Furthermore, focusing on miners, investors should also consider the volatility of gold prices and the dependency of mining companies on stable production costs. Rising operational expenses, driven by inflation and stricter environmental regulations, could pressure margins for Australian gold producers.
Our View: The S&P/ASX All Ordinaries Gold index offers targeted exposure to Australia's vibrant gold mining sector. While it can be volatile, its performance is underpinned by Australia's leading role in global gold production. As a result, investors seeking to track gold-related stocks should find the index provides a well-diversified group of companies within the sector (listed in Australia, of course).
Who Should Invest in the S&P/ASX All Ordinaries Gold Index?
When assessing ETFs that track the index, it is important to note that not every asset will be the perfect fit for every investor. Therefore, it is important to make sure that it aligns with your investing characteristics and golds. As a result, the XGD index index may appeal to a specific group of investors, including:
- Gold-focused investors: Of course, investors looking to gain direct exposure to the performance of the gold sector will find this index attractive. However, those same investors should also focus on the gold sector and companies in Australia specifically.
- Portfolio diversification seekers: Gold is seen as a safe haven asset and has been used to provide balance to portfolios or as a hedge against inflation. Investors looking for these characteristics may want to look further at ETFs tracking the index.
Long-term investors: Investors with a longer time horizon can benefit from potential capital appreciation in the gold sector over time.
