Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield. That scenario implies bullion will be helped if the Federal Reserve declines to raise rates later this month.
Charts show “gold finally breaking a downtrend in place since the metal hit a peak above $1,900 an ounce in August 2011. In 2016 gold attempted to break through this resistance level on several occasions, but failed,” according to Mining.com.
Year-to-date, investors have added $1.2 billion to GLD. In the current quarter, GLD has seen nearly $787 million in inflows.
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Tom Lydon’s clients own shares of GLD.