Global Equities Slip Helps Safe-Haven Gold ETFs

November 14th at 7:00am by Tom Lydon

Some Wednesday weakness in global equities steered investors toward safer plays, lifting gold prices, along with related exchange traded funds, from a one-month low.

The SPDR Gold Shares (NYSEArca: GLD) was up 0.3% Wednesday. GLD is down 24.4% year-to-date.

COMEX gold futures rose 0.1% Wednesday, trading around $1,272.6 per ounce after falling 3.5% in the previous four sessions.

“The weakness in equities is bringing some people to gold,” David Meger, the director of metal trading at Vision Financial Markets, said in a Bloomberg article. “The price drop has improved physical demand.”

The MSCI All-Country World Index dipped as much as 0.7% Wednesday. Meanwhile, gold demand increased “marginally” overnight in China, the second largest consumer of gold.

Gold prices are heading for their first annual decline since 2000 after investors shunned safe-haven assets in favor of jumping on the rally in equities.

Additionally, Fed monetary policy changes have dampened gold expectations. [Gold ETFs Brush Off Central Bank Policies]

“Gold’s negative price reaction to the possibility of a December Fed tapering indicates that the bullion market is likely to remain sensitive to expectations for changes in monetary policy,” HSBC analyst Howard Wen said, BullionVault reports. “We expect the bullion market to remain data-dependent.”

Other physically backed gold ETFs include:

  • iShares Gold Trust (NYSEArca: IAU): down 24.4% year-to-date
  • ETFS Physical Swiss Gold Shares (NYSEArca: SGOL): down 24.4% year-to-date
  • ETFS Physical Asian Gold Shares (NYSEArca: AGOL): down 24.5% year-to-date

SPDR Gold Shares

For more information on gold, visit our gold category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own 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.