Gold exchange traded products such as the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) have retreated a bit in recent days as the July jobs report is stoking speculation the Federal Reserve could raise interest rates this year.
However, data indicate professional traders are betting gold will rebound. Gold and the miners group slipped Friday on rising bets the Fed would raise interest rates soon, with some eying a September rate hike, after the U.S. economy added 255,000 jobs in July.
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Higher interest rates weigh on gold and other hard assets as the commodity pays investors nothing and struggles to compete with yield-generating assets when borrowing costs increase.
“Those positions were subsequently trimmed but according to the CFTC’s weekly Commitment of Traders data up to August 2 released on Friday speculators cut shorts and added to longs for a net gain of 1.3 million ounces to 26.7 million ounces or 831.3 tonnes,” reports Frik Els for Mining.com.
[related_stories]Some analysts still believe that is possible gold ascends to $1,500 per troy ounce. Gold bullion prices have surged almost 20% this year as the Fed previously signaled it would slow the pace of interest rate normalization this year – higher interest rates typically weigh on gold prices since the hard asset provide no yield and would become less attractive to higher-yielding conservative debt assets in a rising rate environment.
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