Gold and related gold ETFs were golden in the first quarter of 2018 relative to other assets. The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and other gold ETFs notched positive first-quarter performances while the S&P 500 finished lower by 1%.
Gold’s recent bullishness is impressive when considering that the Federal Reserve raised interest rates earlier this month, setting the stage for two more rate hikes later this year. However, the yellow metal has been boosted by the dollar’s disappointing showing this year.
“Bullion’s wrapping up a third quarterly gain, a feat not seen since 2011, and exchange-traded fund holdings are near the highest in a half-decade. Haven demand may also get a boost with foreign-policy hawks in the ascendant in Washington,” reports Bloomberg.
Gold’s haven qualities back in focus
GLD is the largest physically backed gold ETF on the market, providing investors exposure to gold price movement in an easy-to-use investment vehicle. The ETF is backed by physical gold bars stored in London vaults. The gold trust currently holds about 27.2 million ounces of gold, so each SDPR Gold Shares represents fractional ownership of the underlying gold.
“Gold’s haven qualities have come back in focus this year as President Donald Trump’s administration picks a series of trade fights with friends and foes, and investors fret about equity market wobbles that started on Wall Street and echoed around the world,” according to Bloomberg. “At the same time, although geopolitical tensions with North Korea may be easing, Trump’s pick of John Bolton as his new national security adviser has spurred speculation of a potentially harder line against Iran.”