A Move Above This Price Point Could Lift Gold ETFs
This article was originally published on ETFTrends.com.
Gold's recent move above $1,300 per troy ounce could lure investors back to the yellow metal and the related exchange traded funds. The SPDR Gold Shares (GLD) , iShares Gold Trust (IAU) and Aberdeen Standard Phys SwissGold Shr ETF (SGOL) are coming off impressive December showings.
For its part, GLD, the world's largest gold-backed ETF, gained just over 5% in the last month of 2018. Given the heightened uncertainty, money managers have taken on their most bullish position on gold in half a year while gold holdings in physically backed ETFs are on the rise.
“The most-active gold futures contract could accelerate to the upside if the market can break above the psychologically important $1,300-an-ounce level, says George Gero, managing director with RBC Wealth Management,” reports Kitco News.
Physically backed ETFs have seen gold holdings jump as equities retreated and on expectations for fewer rate hikes in 2019. Assets in gold ETFs increased for 13 consecutive sessions through December 24 to 2,187.2 tons.
$1,300 Is Important
“Gold continues to move toward [the] $1,300 area, which may attract even more haven seekers as new worries like earnings and consumer sentiment emerge beyond the Brexit, global slowing economies and coming Fed hikes,” said RBC's Gero, according to Kitco.
Recently, gold has been benefiting from speculation that the Federal Reserve will slow its pace of interest rate hikes in 2019. Higher interest rates damp the allure of gold because bullion does not offer interest or coupon payments. Additionally, some market observers believe the dollar is poised to decline this year after ranking as one of 2018's best-performing major currencies.
Over the near term, gold could be data dependent as a spate of important economic data releases from the U.S. and China are expected in the coming days.
“Gold may move up slower from these levels -- awaiting more headlines from Washington [and] China, and more investors fleeing risk may add to gold,” said RBC's Gero, according to Kitco.
For more information on the gold markets, visit our gold category .
Tom Lydon's clients own shares of GLD.
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