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Investors Turn Back to Safe-Haven Gold ETFs


Volatility in the equities market and the sudden plunge in oil prices and energy stocks have helped gold bullion and related exchange traded funds regain their safe-haven status.

Over the past month, the SPDR Gold Shares (GLD) , iShares Gold Trust (IAU) and ETFS Physical Swiss Gold Shares (SGOL) have increased a little over 6.7%. Meanwhile, the S&P 500 index is down 0.4% over the past month.

COMEX gold futures were trading at $1,228.7 per ounce Thursday.

More investors are picking up gold, with GLD holdings up almost 1% this month, reversing four straight months of losses, reports Debarati Roy for Bloomberg.

Gold is beginning to pick up steam as global equities swayed and oil prices dipped to a five-year low. Additionally, along with the safe-haven demand, investors are turning to the precious metals as a store of value to hedge against easing monetary policies from central banks in Europe and Asia.

“The reversal in the equity market has created some volatility, and that’s translating into a little bit of fear and a bid for gold,” Charlie Bilello, the director of research at Pension Partners LLC, said in the Bloomberg article. “An added bonus has been the weakness in the dollar. A combination of all this is pushing people toward gold.”

The volatility Wednesday helped GLD experience its largest single day increase in assets since July 14 as bullion holdings increased by 2.99 metric tons, or 0.4%, to 724.8 metric tons. [Gold ETF Volatility Rises]

“Some short-term institutional buyers have returned to gold as prices have been resilient at current levels,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp., said in the article. “Stimulus measures announced in various countries are bringing some investors to gold.”

For instance, the Bank of Japan will issue $855 billion in quantitative easing while the European Central Bank will raise assets by about half the 1 trillion in euros it is targeting, Bloomberg reports.

SPDR Gold Shares


For more information on the gold market, visit our gold category.

Max Chen contributed to this article. Tom Lydon’s clients own shares of GLD.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.