Gold prices seem unstoppable, as they have topped $1,500 an ounce, and fundamental factors are supporting a further rise. Exchange traded funds (ETFs) holding gold are also rallying.
SPDR Gold Shares (NYSEArca: GLD) is playing off a weaker U.S. dollar and reinforced inflationary concerns. [Gold, Silver ETFs Rise on Weaker Dollar.] Fear of the debasement of the U.S. dollar is not helping to strengthen the currency and euro zone instability is creating more demand for the precious metal.
William Rhind, strategic director of U.S. business development at ETF Securities, stated that higher-than-expected inflation in the U.S., Europe, China and India is driving investor concern. [Gold ETFs Rise Following S&P Downgrade as Metal Nears $1500.]
“Additionally, strong global growth data, particularly within China’s manufacturing sector, is adding to the investment demand for silver, which reached its highest level since January 1980 last week, closing in on the $50/oz mark,” Rhind said. “China’s growth momentum continues to accelerate despite recent monetary policy tightening, furthering speculation that industrial demand for silver will continue to recover strongly. Silver also continues to benefit from its ‘store of value’ properties alongside gold.”
Other gold and gold-miner ETFs:
- ETFS Physical Swiss Gold (NYSEArca: SGOL)
- iShares COMEX Gold (NYSEArca: IAU)
- Market Vectors Gold Miners ETF (NYSEArca: GDX)
ETFS Physical Swiss Gold
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.
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