Gold Prices Tick Higher Again on Uninspiring Economic Data

Gold prices have been moving higher in over the past couple of days according to a recent MarketWatch report.

“Gold futures climbed Monday for a second straight session, marking their highest settlement in more than a week, as disappointing U.S. economic data provided support for the haven metal,” the MarketWatch report said. “Prices for gold moved higher after data from the New York state region, the Empire State factory index, showed a drop to 18.3 in August from 43 in the prior month.”

As the world watches events unfold in Afghanistan, fidgety investors may be seeking out gold as a commonplace safe haven. The precious metal is rebounding nicely after a market flash crash.

“Gold is surprisingly thriving a week after a small flash crash sent it tumbling back towards $1,680,” said Craig Erlam, senior market analyst at Oanda. “Since then, the yellow metal has done well; a combination of an overexaggerated initial move being unwound and a softer dollar/lower yields giving it new life.”

Additionally, rising Covid-19 infections are also adding to the anxiety and putting higher growth projections at risk.

“Gold is being partially supported by lower growth rate projections,” said Chintan Karnani, director of research at Insignia Consultants.

Playing Gold Prices With Miners

Investors can indirectly play precious metals with mining ETFs like the Sprott Gold Miners ETF (SGDM). The ETF seeks investment results that correspond generally to the performance of its underlying index, the Solactive Gold Miners Custom Factors Index, which aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges.

The index uses a transparent, rules-based methodology that is designed to emphasize larger-sized gold companies with the highest revenue growth, free cash flow yield, and the lowest long-term debt to equity. The index is reconstituted on a quarterly basis to reflect the companies with the highest factor scores.

Another option is the Sprott Junior Gold Miners ETF (SGDJ), which tracks small cap gold mining companies, focusing on small companies with strong revenue growth and price momentum. Both of these factors have historically predicted long-term stock performance.

The portfolio, which holds roughly 30 to 40 stocks at any given time, tracks the Solactive Junior Gold Miners Custom Factors Index. It is rebalanced semi-annually, ensuring that it reacts to seize opportunities in a timely fashion and keeps its holdings optimized.

For more news, information, and strategy, visit the Gold & Silver Investing Channel.