Gold prices continue to push to higher heights, instilling a bullish sentiment among the capital markets as the expectation of interest rates falling isn’t hindering the rally. Other factors are also helping the metal to rally, opening opportunities in other areas like mining.
As Kitco reported, the price for the precious metal reached all-time highs last week, pushing past the $2,000 price level. The most recent rally was riding the momentum from positive inflation data and the Fed’s dovish comments following a rate pause at the last Fed meeting. Kitco also reported that a weekly gold survey revealed that investors and analysts are optimistic for the precious metal in the near term.
“Gold is vulnerable here to negative developments in the near term,” said Adrian Day, president of Adrian Day Asset Management. “But the odds are turning distinctly in gold’s favor for a strong move over the next year and more as central banks reach the end of the tightening cycle even as the economies slip into recession.”
“The U.S. rates are at 5.50%,” said Adam Button, head of currency strategy at Forexlive.com, who also noted that the dollar’s recent retreat should also support higher prices for the yellow metal. The U.S. Dollar Index (DXY) has fallen 1.5% within the past month.
“That’s a lot of cutting compared to some other places. So you add that in, and you could get a 15% rally in gold just on U.S. dollar softness in the next two years. That’s almost mechanical. And gold is already at record highs in many other places,” added Button. “And then technically, when it gets through that $2,100 range, it’s blue skies.”
Gold Mining ETF Options
As mentioned, investors who want to take advantage of these rallying prices can also look to gold mining stocks. While there’s a plethora of options, including discernments based on market cap size, Sprott has a few exchange-traded funds that focus on generalized exposure to large- or small-cap companies.
For the former, consider the Sprott Gold Miners ETF (SGDM). The mining ETF seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index, which tracks the performance of larger-sized mining companies on Canadian and major U.S. exchanges.
An alternative to SGDM is the more growth-oriented Sprott Junior Gold Miners ETF (SGDJ). The fund tracks the Solactive Junior Gold Miners Custom Factors Index. This index follows the performance of the small-capitalization precious metal companies.
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