Global X Gold Bullion (Currency Hedged) ETF (ASX: GHLD)

The Global X Gold Bullion (Currency Hedged) ETF (GHLD) offers a sophisticated yet accessible vehicle for gaining exposure to physical gold while insulating portfolios from Australian dollar volatility. By utilising a systematic hedging strategy, the fund aims to deliver returns corresponding to the spot price of gold, specifically targeting the elimination of AUD/USD currency fluctuations.

Each unit is backed by physical bullion securely vaulted in London by JPMorgan Chase Bank, adhering strictly to LBMA Good Delivery and Responsible Sourcing standards. This allocated structure ensures transparency through daily reporting of individual bars. Beyond simple commodity exposure, GHLD serves as a strategic diversifier, demonstrating lower historical correlations with global equities and domestic bonds than unhedged alternatives. Historical data suggests this currency-hedged approach particularly excels in the twelve months following US Federal Reserve rate-cut cycles, providing investors with a robust defensive asset tailored for the Australian market.

The Global X Gold Bullion (Currency Hedged) ETF (GHLD) gives you a simple and cost-effective way to invest in physical gold while being hedged against the risk of a rising Australian Dollar. The gold bullion is vaulted by JPMorgan Chase Bank, N.A. in London and adheres to global gold quality standards as per the London Bullion Market Association’s (LBMA) rules for Good Delivery.

Global X Gold Bullion (Currency Hedged) ETF (GHLD) seeks to provide investment results which correspond generally to the spot price of gold bullion, hedged with the aim of eliminating the impact of currency movements between the US dollar and Australian dollar, before fees and expenses.

Currency-hedged gold has had lower correlation with global equities, broad commodities, and Australian government bonds than unhedged gold over the past decade. 

Correlation Matrix: Hedged Gold vs Unhedged Gold

Source: Bloomberg. (n.d.) Accessed on 28/02/2025. Dates: 28 February, 2015 – 28 February, 2025. Monthly correlation in AUD terms. Hedged gold returns assume perfect hedging with no transaction fees. Gold = Global X Physical Gold. Broad Commodities = BCOM Index. Australian government bonds = S&P/ASX Australian Government Bond Index. World Equities = MSCI World index. 

• Assets invested in GHLD support the purchase of physical gold bullion, held by JPMorgan Chase Bank, N.A., at one of the two largest commercial gold vaults in London, the epicentre of the global gold market.
• Each physical bar is segregated, individually identified, and allocated specifically to GHLD. A list of individual bars held is published on the Global X website on a daily basis.
• Gold held with respect to GHLD adheres to global gold quality standards as per the London Bullion Market Association’s (LBMA) rules for Good Delivery as well as the LBMA Responsible Sourcing standards.
• The Fund also implements a systematic hedging strategy to minimise the impact of fluctuations in the AUD/USD exchange rate. Gains are systematically reinvested into physical gold bullion, while losses are offset by a sale of gold bullion.
• Units in GHLD are exchange traded, just like a share, and are settled and held in ordinary brokerage accounts.

Investors typically gravitate towards hedging gold when interest rates shift in the US and there is evidence that this can provide outsized returns in certain scenarios. Historically, hedged gold has performed in line with unhedged gold throughout rate cut cycles, however hedged gold has strongly outperformed in the 1-year postrate cut cycles.

Hedged Gold Outperforms Post Fed Rate-Cut Cycles
Source: Global X ETFs using information from Bloomberg. (n.d.) Accessed 28/02/2025. Hedged gold returns assume perfect hedging with no transaction fees.

• GHLD can enhance a portfolio’s overall risk/return characteristics through diversification.
• It can be used as part of the alternatives allocation in a portfolio.
• As a tactical investment based on prevailing gold price or exchange rate dynamics.

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Global X Management (AUS) Limited (“Global X”) (Australian Financial Services Licence Number 466778, ACN 150 433 828) is the product issuer. Offers of interests in any retail product will only be made in, or accompanied by, a Product Disclosure Statement (PDS). In respect of each retail product, Global X has prepared a target market determination (TMD). Each PDS and TMD is available at www.globalxetfs.com.au. The information on this website is general in nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information, you should consider the appropriateness of the information having regard to your objectives, financial situation or needs and consider seeking independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Any investment decision should only be made after obtaining and considering the relevant PDS and TMD. Investments in any product issued by Global X are subject to investment risk, including possible delays in repayment and loss of income and principal invested. The value or return of an investment will fluctuate and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance.