Gold and related exchange traded funds are among the few areas that investors found refuge in as U.S. equities suffered through their worst Christmas Eve ever.
On Monday, the SPDR Gold Shares (NYSEArca: GLD) gained 1.1%, iShares Gold Trust (NYSEArca: IAU) added 1.0% and Aberdeen Standard Phys SwissGold Shr ETF (NYSEArca: SGOL) rose 1.1%, breaking back above their long-term trend line at the 200-day simple moving average, as Comex gold futures were 1.2% higher to $1,273 per ounce.
Additionally, gold miners were also rallying off the strength in gold bullion on Monday, with the VanEck Vectors Gold Miners ETF (NYSEArca: GDX) up 3.4% and the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSEArca: GOAU) 2.7% higher. GDX was also testing its long-term resistance at the 200-day simple moving average.
Gold hit a six-month peak Monday as stock investors turned risk off on mounting concerns over a global economic slowdown.
“Gold has continued to be firm here in the course of equity market weakness and an ongoing bevy of factors that are concerns for the market such as trade wars, interest rate hikes and others,” David Meger, director of metals trading at High Ridge Futures, told Reuters.
Global equities weakened for their seventh consecutive session over possibilities of a prolonged U.S. government shutdown and deteriorating global fundamentals.
Gold for Christmas
“Gold prices are moderately higher on safe-haven buying interest heading into the Christmas holiday,” Kitco Metals senior analyst Jim Wyckoff said in a note.
“A lower U.S. dollar index today is also working in favor of the precious metals market bulls. There is marketplace unease over the U.S. government’s partial shutdown that could last a while,” Wyckoff added.
The U.S. Dollar Index, which tracks the USD against a basket of major international currencies, was 0.5% lower to 96.52 Monday. The greenback was under pressure on heightened concerns that the Federal Reserve would continue hiking rates into a weakening economy.
“If the Fed is going to continue its aggressive stance, then our economy will slow down and a recession is a possibility. There is just so much negative news, that I cannot see gold do anything but go up,” Walter Pehowich, executive vice president of investment services at Dillon Gage Metals, told Reuters.
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