Gold bullion and precious metal-related exchange traded funds have regained their luster this year, and hard asset may continue to shine as safe-haven demand and central bank inaction help attract investors.
ETF Trends publisher Tom Lydon recently appeared on CNBC’s Futures Now to talk the recent surge in interest for gold assets.
For instance, the SPDR Gold Shares (NYSEArca: GLD), the largest bullion-backed exchange traded fund in the world, saw $756 million in net inflows over the past week and attracted $1.7 billion year-to-date, according to ETF.com.
GLD has increased 7.7% year-to-date and is now trading back above its long-term, 200-day simple moving average. [Positive Vibes for Gold ETFs]
Comex gold futures were up 1.2% Thursday to $1,155.3 per ounce.
Speculation of higher interest rates weighed on gold ETFs last year, but traders have lowered expectations for multiple rate hikes this year after New York Fed President Bill Dudley said that financial conditions have tightened in the weeks since the Federal Reserve’s rate hike in December. Without the Federal Reserve hiking rates, the U.S. dollar has quickly depreciated, another boon for USD-denominated gold as the weaker U.S. currency makes it cheaper for foreign buyers.
Even if rates rose a couple basis points, the continued low rate environment is good for gold, which does not pay a yield and would struggle to compete with yield-generating assets when rates rise.
Nevertheless, volatile global equity markets this year have prompted investors to reevaluate safe-have investments, bolstering gold in the process.
Meanwhile, the Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest and most heavily traded gold miners ETF, rose 11.9% year-to-date and broke back above its long-term trend line on Thursday.
Metals and mining stocks have been rallying on the strengthening gold prices, depreciating U.S. dollar and speculation that the Federal Reserve would not be able to further tighten rates on a weakening economy. [Precious Metals, Miner ETFs Shine]
SPDR Gold Shares
Click on the video below to see the full interview on CNBC.