Gold bullion and related exchange traded funds are on pace for their best monthly gain in almost two years as political risks and a depressed growth outlook triggered increased demand for safe-haven bets.
Over the past month, the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and Aberdeen Standard Phys SwissGold Shr ETF (NYSEArca: SGOL) rose 3.7% and broke back above their long-term trend line at the 200-day simple moving average.
Meanwhile, Comex gold futures were hovering around $1,269 per ounce and was set to enjoy their best monthly advance since January 2017.
Gold futures hit a six-month high as U.S. equities danced close to a bear market as a government shutdown in Washington extends to its fifth day amid no signs of a resolution over funding for a wall on the Mexico border, Bloomberg reports.
Given the heightened uncertainty, money managers have taken on their most bullish position on gold in half a year while gold holdings in physically backed ETFs are on the rise.
“New money is coming into the gold market as a result of the shutdown, propelling the move higher,” Phil Streible, a senior market strategist at RJO Futures, told Bloomberg. “The path of least resistance is up.”
Gold ETFs See Holdings Rise
Physically backed ETFs have seen gold holdings jump as equities retreated and on expectations for fewer rate hikes in 2019. Assets in gold ETFs increased for 13 consecutive sessions through December 24 to 2,187.2 tons.
The latest round of political risk from the government shutdown has pushed traders into safety plays. Nine of 15 U.S. federal departments and dozens of other agencies closed down on Saturday after President Donald Trump refused to sign a spending bill that did not include border wall funding.
The metal’s rally “should be a stark reminder to investors that gold in any form should be an essential part of any long-term investment strategy, as again the yellow metal has proven its weight when markets turn turbulent,” Stephen Innes, head of Asia Pacific trading at Oanda Corp, told Bloomberg
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