Precious metals exchange traded funds could still have some more upside over the short run, but a steadier growth outlook could weigh on the asset category’s mid-term outlook.
Average projections put gold prices at little above their current level of $1,830 an ounce for the rest of 2021 before dipping next year as the global economic recovery stabilizes and central banks start rolling back their accommodative monetary policies Reuters reports.
Gold, a traditional safe store of wealth, rallied to record heights of over $2,000 per ounce on the shift away from risk assets early in the coronavirus pandemic, but it has since weakened as economies reopened and markets shifted to a risk-on mood.
“Safe-haven demand should fade further as global growth recovers and inflation turns out to be temporary,” Julius Baer analyst Carsten Menke told Reuters.
A Hike In Rates
Furthermore, global central banks could begin to hike interest rates in response to the improving economic environment, pushing up yields on government bonds, making debt a more attractive play than precious metals that do not offer a yield.
For now, gold is still supported by a recovery in jewelry demand, a potentially weakening U.S. dollar, and any other short-term growth bumps. The recent pickup in inflation could also add to gold demand as a better store of wealth.
Meanwhile, silver is also seen as both a safe-haven asset and a widely used component in the industrials segment.
“Silver is poised to benefit from the electrification process because of its use in solar panels, EVs (electric vehicles) and charging points,” Suki Cooper, an analyst at Standard Chartered, told Reuters.
Investors who are interested in gaining exposure to precious metals can look to easy-to-use ETFs. For example, the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (IAU), Aberdeen Standard Gold ETF Trust (SGOL), and Sprott Physical Gold Trust (PHYS) offer exposure to gold price movements.
Additionally, the Aberdeen Standard Physical Silver Shares ETF (SIVR), iShares Silver Trust (SLV), and Sprott Physical Silver Trust (PSLV) can help track the silver market.
For more information on the precious metals market, visit our precious metals category.