Gold Climbs as Fed Chair Stresses Need to do More for Economy

Even amid the positive news that a coronavirus vaccine looks promising, gold rose to touch past the $1,750 mark during Tuesday’s trading session. Federal Reserve Chairman Jerome Powell stressed the need to deploy all the central bank’s tools in order to stave off a recession.

“We are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response,” said Powell in front of the Senate Banking Committee.

“The coronavirus outbreak is, first and foremost, a public health crisis,” Powell added. “The scope and speed of this downturn are without modern precedent and are significantly worse than any recession since World War II.”

Investors can get gold exposure via exchange-traded funds (ETFs) like the popular SPDR Gold Shares (NYSEArca: GLD)  and the more cost-effective SPDR Gold MiniShares (NYSEArca: GLDM). Precious metals like gold offer investors an alternative to diversify their holdings, and like other commodities, gold will march to the beat of its own drum compared to the broader market.

In addition to GLD and GLDM, here are a pair of other gold funds to look at:

  1. iShares Gold Trust (IAU): seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold. The advisor intends to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal.
  2. Aberdeen Standard Gold ETF Trust (SGOL): seeks to reflect the performance of the price of gold bullion, less the Trust’s expenses. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market.

For short-term traders looking for leverage can use miners to play gold indirectly via funds like the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT), VanEck Vectors Gold Miners (NYSEArca: GDX)and the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG).

For more market trends, visit ETF Trends.

THEMATIC ETF RESOURCES