Gold futures and ETFs are shooting higher on Tuesday, attempting to break out of the recent consolidation that has taken place since April.
While the lustrous metal has suffered some setbacks over the past few months, economic and political uncertainty has held buyer interest, driving gold higher.
Last week after driving to its highest level since 2011, the gold market was hit with some anticipated technical selling pressure and profit-taking. Today, gold futures ripped up off the open, quickly cresting the $1800 level and reaching as high as nearly $1811 before trading in a tight range just below the mid-April high.
This was good news for gold ETFs like the SPDR Gold Trust (GLD) and the GraniteShares Gold Trust (BAR), both of which are showing modest gains Tuesday as gold futures charge higher.
In a report published Tuesday, the WGC said that gold ETFs saw their seventh straight month of inflows in June with gold holdings rising by 104 tons last month. The inflows have driven gold holdings to new all-time highs of 3,621 tons. The WCG explained that assets under management have also reached their highest level on record.
In the first half of 2020, gold ETFs witnessed inflows of $734 tons valued at 39.5 billion.
“You just can’t ignore the support for gold,” said Kevin Grady president of Phoenix Futures and Options. “Every time the market selloffs we are starting buyers step in.”
Grady said that investors are likely piling into the market as they seek out hedges against rising inflation and market uncertainty.
“In this environment, I think investors will become a lot more aggressive in gold, and by the end of the summer we could see prices above $1,900,” he said.
Jim Wyckoff, Senior Technical Analyst at Kitco.com, sees support for the precious metal as well, noting that even if gold prices flounder around $1,800 for a while, this price level is sustainable for some time.
However, not all investors feel that gold can hold its weight at these levels and that investors should exercise caution before piling in.
“We have seen gold market disappoint time and time again, so you don’t necessarily want to rush in at these levels,” said Phillip Streible, chief market strategist at Blue Line Futures.
Streible said that decreased volatility in the gold market would help to sustain a move above $1,800 an ounce.
“Gold continues to see $40 price swings and we need to see that come down,” he said.
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