The new year is still young, but gold exchange traded funds are certainly enjoying the turning of the calendar.
After falling more than 2% last year while shedding $3.2 billion in assets, enough to drop it from the 10 largest ETFs, the SPDR Gold Shares (NYSEArca: GLD) is up 3.2% since the start of this year and investors are taking note. [Commodity ETFs Stung By 2014 Outflows]
GLD’s assets “rose 0.4 percent to 707.82 metric tons Friday, the biggest jump since July,” reports Debarati Roy for Bloomberg.
GLD’s 3.2% year-to-date rise is made all the more impressive when considering the U.S. dollar continues to gain steam. Since the start of the year, the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP), which tracks the U.S. dollar movements against the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, is higher by 1.7%, a sign the dollar is living up to its reputation for strong January showings. [January is Kind to the Dollar]
Over the past 90 days, UUP has added nearly $84 million in new assets, a total exceeded by just nine other PowerShares ETFs, according to issuer data.
Gold ETFs have also been stymied by the rise of the U.S. dollar, a theme that could again be prominent in 2015, particularly if the Federal Reserve raises interest rates.
Fortunately for bullion and the ETFs backed by it, other developed economies are enacting looser monetary policies. For instance, the Bank of Japan is implementing policies centered on a weaker yen, and the stubbornly low inflation rate in the Eurozone leaves the European Central Bank more room for stimulus measures.
The AdvisorShares Gartman Gold/Euro ETF (NYSEArca: GEUR), an actively managed ETF tracking gold in euro terms, is 8.1% over the past two weeks while the AdvisorShares Gartman Gold/Yen ETF (NYSEArca: GYEN) is higher by 2.1%. GYEN, which is also actively managed, tracks gold in Japanese yen terms.
Still, some market observers remain leery of more upside for gold in 2015, noting that with interest rates remaining low and the bull market in U.S. equities continuing, investors are apt to prefer bonds and stocks over commodities.
SPDR Gold Shares
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD.