Gold exchange traded products, including the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), have traded mostly flat over the past few days, leading some gold market observers to highlight geopolitical flareups and demand trends as the most credible near-term catalysts for the gold metal.
Gold prices could move modestly higher with some help from emerging markets, namely China and India. However, the dollar has recently retreated in noticeable fashion, helping aid gold’s ascent along the way.
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.
“Gold continues to receive bullish news from outside markets and geopolitical events. OPEC has agreed to extend production cuts for another 9 months, the Macron election victory in France (bolstering the Euro) and the North Korean standoff have made the case for Gold as a safe haven investment. However, the 800 lb. gorilla in the room is physical demand for the metal,” according to OptionsExpress.