Precious metals-related exchange traded funds surged Thursday as traders looked to hedge against lingering geopolitical tensions and turned to hard assets with U.S. Treasury yields slipping.
Among the better-performing non-leveraged ETFs of Thursday, the ETFMG Junior Silver Miners ETF (SILJ) advanced 5.5%, the VanEck Vectors Gold Miners ETF (GDXJ) increased 5.5%, the Global X Silvers Miners ETF (SIL) rose 4.7%, and the VanEck Gold Miners ETF (GDX) gained 4.2%.
Meanwhile, the SPDR Gold Shares (GLD) was 1.6% higher and the iShares Silver Trust (SLV) was up 0.7% as Comex gold futures pushed 1.7% higher to $1,806.2 per ounce and Comex silver futures increased 1.2% to $20.1 per ounce.
Investors picked up precious metals as a traditional safety hedge with yields on benchmark U.S. Treasuries dipping from their highest level in over a week.
“Most of the investors are on the sidelines because there are tensions brewing between US and China, so people are not sure what is going to happen,” Brian Lan, managing director at dealer GoldSilver Central, told Reuters.
Nevertheless, investors are still wary of future Federal Reserve moves as policymakers have remained firm on hiking interest rates to curb inflationary pressures.
“Comex gold traded higher amid choppiness in US dollar and bond yields as market players assess US economic numbers and central bank comments to determine future move. Market players are also positioning for Bank of England interest rate decision as the central bank is expected to fasten rate hikes to control inflation,” Ravindra Rao, VP- Head Commodity Research at Kotak Securities, told Livemint.
Market observers are also watching the ongoing strength in the U.S. dollar, which makes USD-denominated gold and silver bars pricier for foreign buyers.
“Furthermore, there is also another area that people are thinking that if interest rates are going up, probably holding the dollar might make more sense than holding gold. So I expect gold prices to be range-bound in the near term,” Lan said.
“Gold may remain volatile as market players react to data and central bank stance however with Fed officials maintaining support for rate hikes, the US dollar may remain supported which may keep pressure on gold,” Rao added.
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