A Look at SPDR Gold Trust (GLD) Valuation as Central Bank Gold Demand Fuels Investor Attention

SPDR Gold Trust (GLD) is back in the spotlight after a widely-circulated forecast from Goldman Sachs called for gold to potentially hit $4,000 by mid-2026. The catalyst behind this bold projection is surging demand from global central banks that are looking to hedge against geopolitical concerns and diversify away from the U.S. dollar. In addition, the possibility of further gains exists if investor trust in U.S. institutions takes a hit, making it easy to see why many are giving GLD a fresh look this week.

This renewed optimism around gold comes after a strong run for SPDR Gold Trust. The fund has delivered a gain of around 45% over the past year, and upward momentum has continued with nearly 9% appreciation over the past 3 months. Central bank buying has been a steady driver in the background since 2022. The latest surge in demand and ongoing discussion of higher-for-longer risks have caught investors’ attention, reinforcing gold’s reputation as a safe place to hide during global uncertainty.

With both GLD’s price and sentiment on the rise, some may question whether the market is leaving the stock undervalued, or if it is now fully reflecting expectations for increased central bank buying and geopolitical risk.

Price-to-Earnings of 4.2x: Is it Justified?

With a price-to-earnings (P/E) ratio of 4.2x, SPDR Gold Trust stands out as undervalued compared to both the broader US market and its industry peers. This low P/E signals that the market is pricing GLD’s profit streams well below the average for US capital markets companies, which typically command much higher multiples.

The P/E ratio measures how much investors are willing to pay for $1 of reported earnings. For a fund like SPDR Gold Trust, a lower ratio can suggest skepticism about the sustainability of earnings or undervaluation due to recent strong financial results. In comparison, the industry average P/E is notably higher at 26.5x, indicating the market prices similar assets at a substantial premium.

This sizable gap raises the question: Is the market missing something, or is there justified caution over future profits? With recent explosive earnings growth, the case for a re-rating becomes even more compelling if current trends persist.

Result: Fair Value of $267.96 (OVERVALUED)

See our latest analysis for SPDR Gold Trust.

However, persistent dollar strength or a sudden shift in central bank policy could quickly dampen enthusiasm and challenge the bullish outlook for GLD.

Find out about the key risks to this SPDR Gold Trust narrative.

Another View: Discounted Cash Flow Model

Taking a different perspective, our DCF model suggests a result that stands in contrast to the earlier price-based valuation and indicates a less optimistic outlook. Could this signal caution or a hidden opportunity?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding SPDR Gold Trust to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own SPDR Gold Trust Narrative

If you want to dig deeper or would rather draw your own conclusions, you can easily analyze the data and build your own perspective in just a few minutes. Do it your way

A great starting point for your SPDR Gold Trust research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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