Despite Pullbacks, Precious Metals Poised to Push Higher | ETF Trends

Gold and silver have seen better days, but the U.S. Gold Bureau is optimistic about precious metals in 2022 as inflation continues to circle the economy.

While the Federal Reserve is looking towards more hawkishness, any misstep in monetary policy could push precious metals higher. The dollar is finally starting to retreat, and bond yields are starting to tick lower again, paving the way for precious metals.

“As we look at how gold and silver have performed in the past, it gives us some idea about how they may perform in the days ahead,” the U.S. Gold Bureau says. “One of the best times to invest in a proven asset is when it has recently underperformed. Adding favorable conditions to the mix makes it an even better time for the metals to outperform.”

“Today, we have this dual setup emerging for the metals, with recent pullbacks acting like a coiled spring and current economic conditions acting as additional springs to propel gold and silver further than they have been before,” the Bureau adds further. “I believe we will see gold and silver reach new highs in the current bull market, and some of that distance will be traveled this year.”

The capital markets may have already priced in the Fed’s push to raise rates in 2022. Given where gold is now, more strength could be ahead.

“Take a look at how high Treasury yields have run. The market is pricing in well over 90% chance that the Fed will raise rates in March. And gold is having its best week in a couple of months,” OANDA senior market analyst Edward Moya told Kitco News. “Gold is not able to break beyond its recent highs, but things are looking pretty good.”

One ETF for All Precious Metals

Rather than maintain positions in various precious metals, investors can get it all in one fund: the Invesco DB Precious Metals Fund (DBP). DBP seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Precious Metals Index Excess Return (DBIQ Opt Yield Precious Metals Index ER or Index) over time, plus the income from the fund’s holdings of U.S. Treasury securities, money market funds, and T-Bill ETFs, less the fund’s expenses.

The fund is designed for investors who want a cost-effective and convenient way to invest in commodity futures, making it an option for hedging against inflation. Additionally, the index is a rules-based index composed of futures contracts on two of the most important precious metals, gold and silver.

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