Gold exchange traded products, including the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU), are getting drubbed. Major gold ETFs are down more than 1% over the past week, indicating that market participants did not embrace the yellow metal as a safe-haven play amid the economic turmoil in Turkey.
Heading into August, gold had notched four consecutive monthly losses and concerns are mounting regarding the near-term fate of bullion. The strengthening U.S. economy is translating to a stronger dollar, which is often a problem for gold. Gold, like other commodities, is denominated in dollars, meaning it has an inverse relationship to the U.S. currency.
“Gold fell to fresh 18-month lows on Monday as the attractiveness of the hard asset continues to wane on the back of rising interest rates in the US and a strengthening dollar,” reports Frik Els for Mining.com. “December futures trading in New York declined 1.5% to $1,201 a troy ounce, the lowest since February last year and now down more than 12% from its 2018 high reached in January. Spot prices dropped through the psychologically important $1,200 level with a dip to $1,193.15 an ounce.”
Looking for Gold Investing Catalysts
Some gold market observers believe the yellow can firm up and trend higher next year as the dollar retreats. At least one gold bull believes bullion could return to $1,400 for the first time since 2013. The current environment, characterized by economic growth and heightened inflation expectations, provides an ideal backdrop for investors to consider the benefits of real assets.
However, data suggest professional traders are boosting their short bets on gold.