Gold’s safe-haven status has been on display for much of the coronavirus outbreak, boosting ETFs, including the SPDR Gold Shares (NYSEArca: GLD) and the SPDR Gold MiniShares (NYSEArca: GLDM).
Already two of this year’s best-performing commodities exchange traded products (ETPs), GLD and GLDM could have more upside as yet another bank boosts its bullion forecast.
Gold bullion has been a traditional safe-guard of wealth and purchasing power in times of high inflation, and the loose monetary policies should devalue the currency. Lower interest rates are helping gold’s cause, too. Depressed interest rates diminish the opportunity cost of holding non-yield-generating assets, like gold.
“UBS Investment Bank strategist Joni Teves believes the price of gold could ‘break the highs’ seen earlier this year, with the scale of the global pandemic and its potential economic fallout driving up demand for safe haven assets like gold,” reports Jackson Chen for Mining.com.
Gold Outlook Tempts
With the federal government stepping in to help shore up the economy, it might seem like gold gains could be tamped own. However, some market experts predict that the U.S. economy will be tested in the coming months, potentially further boosting bullion and ETFs like GLD and GLDM.
“Gold is becoming attractive in this environment where uncertainty is very high, growth is expected to weaken, and at the same time you have negative real rates which make gold attractive to hold as a diversifier in investor portfolios,” said Teves, the UBS analyst.
The World Gold Council (WGC) highlighted gold-backed ETFs that attracted inflows of over 298 tons of the precious metal in the first three months of the year, which sent global holdings in these physically-backed products to a record high of 3,185 tons. The WGC also added that ETF inflows for the first quarter surged more than 300% year-over-year.
Teves “added that the recent move in gold has been mostly driven by investor interest, particularly institutional investors,” according to Mining.com.
The analyst sees gold ascending to $1,800 per troy ounce, up from Monday’s close around $1,701 per ounce.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.