As the capital markets slowly digest the rate pause by the U.S. Federal Reserve, a big move for gold could be brewing after it’s stalled in a sideways pattern for a few months now.
“Gold has traded sideways long enough that we are due for a bigger move one direction or the other — retesting the $1,880 level or getting back up to around $2,000,” said Gainesville Coins precious metals expert Everett Millman in a Kitco News report.
Even with the latest rate pause, gold has remained relatively staid. The precious metal is still up over 6% for the year, and with the potential for more rate hikes ahead and possibly a recession, this could feed into more demand for safe haven assets like gold.
“What the Fed did was neutral for gold. A pause is good for gold. But it was the most hawkish pause we could have gotten. And that is why gold has traded sideways,” Millman added further.
Speaking of central banks, they’ve toned down their purchases of gold, but continued buying could buoy prices in the meantime.
“Even though it slowed down quite a bit,” said Millman. “The World Gold Council survey said that one in four central banks planned to continue to buy gold. They buy in large volumes, and gold will respond to what central banks are doing.”
Get Ahead of Potential Price Action
Investors anticipating a big move in gold can use exchange traded funds (ETFs) to get ahead of the potential price action. More specifically, they can do so via ancillary services like mining with the Sprott Gold Miners ETF (SGDM). If demand continues to rise for gold, this can have a domino effect on miners as well.
Per SGDM’s fund description, the ETF seeks investment results that correspond generally to the performance of its underlying index, the Solactive Gold Miners Custom Factors Index. The index aims to track the performance of larger-sized gold companies. In particular, it tracks stocks listed on Canadian and major U.S. exchanges.
Investors who are looking for gold exposure with the option to potentially exchange shares for physical gold can look to funds like the Sprott Physical Gold Trust (PHYS). The fund provides an enhanced physical bullion structure, offering the ease of purchase and sale that comes with trading on an exchange.
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.
