Major gold ETFs are outperforming a slew of other asset classes, but some traders have mixed views when it comes to their near-term outlook.
While the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) are up more than 13% year-to-date, it’s clear the gold investing is in trend.
Another possible catalyst for gold entering the back of the year is lingering debate surrounding how many times the Fed can raise rates this year – one more is what many traders are betting on, and in 2018, three seems to be the bet there. Importantly, more investors are being lured to gold.
“The put-to-call ratio of SPDR Gold Shares, the largest ETF backed by the metal, is the highest in two years, signaling bearish sentiment may be gaining momentum,” reports Luzi-Ann Javier for Bloomberg. “At the same time, investors poured $177 million into SPDR Gold last week, a fifth straight weekly inflow, while hedge funds and other large speculators boosted bullish bets in gold futures to the highest in a year.”
For the week ended Sept. 18, GLD took in $353 million in new assets, helping pare its third-quarter outflows total to $428 million. Year-to-date, investors have added $1.12 billion to the world’s largest gold ETF.
Investor demand still remains an integral part of the gold equation, too. Moreover, in the face of a stronger dollar and speculation that the Federal Reserve could raise interest rates over the mid- and long-term, gold prices could still move modestly higher with some help from increased demand out of the emerging markets, namely China and India.
“Money managers boosted their net-long position in gold futures and options contracts by 6.1 percent in the week ended Sept. 12, according to Commodity Futures Trading Commission data,” reports Bloomberg. “Bullion climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent. That era of easy money is ending as the Fed raises borrowing costs and policy makers prepare to shrink the $4.5 trillion balance sheet.”
IAU has added over $1 billion in new assets since the start of the year. The aforementioned gold ETFs are up more than 1% over the past month.
Tom Lydon’s clients own shares of GLD.