With investors focused on riskier equities and the S&P 500 hitting a new intra-day record high, gold exchange traded funds are losing their safe-haven appeal.
Physically backed gold ETFs, including the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), decreased about 2.2% Tuesday, failing their 200-day resistance level. The gold ETFs, though, are still up around 7.2% year-to-date. [ETFs to Watch as Ukraine, Russia Tensions Escalate]
COMEX gold futures are now hovering around $1,267 per ounce, the lowest level since February.
Despite continued fighting in eastern Ukraine, the election of Petro Poroshenko, a billionaire chocolate manufacturer, to the Ukrainian presidential office provided some political stability, causing bullion traders to feel “some Ukraine fatigue,” Edel Tully, precious metals analyst at UBS, said in a Financial Times article.
Meanwhile, investors shifted away from the safety of gold Tuesday as rising U.S. consumer confidence and a stronger U.S. dollar fueled a rally in riskier equities, pushing the S&P 500 Index to a new intra-day high.
“The surge in the equity market continues to push gold lower,” George Gero, a vice president and precious-metal strategist at RBC Capital Markets, said in a Bloomberg article. “The fear premium because of Ukraine has lessened.”
Some market analyst expect further declines in gold prices.