The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and other gold exchange traded funds have recently given back some gains, but some market observers believe the outlook for the yellow metal remains compelling.
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.
“All signs point to gold. The safe haven metal took a hit as bond rates jumped in the fourth-quarter of 2016, but has been trending higher despite the rise in real interest rates. Gold bulls should take note of how gold prices have behaved in relation to long-term treasury bonds because they appear to be behaving differently than they have in the past,” reports Crystal Kim for Barron’s.
Encouraging Signs for Gold
Gold bullion has revealed strength in recent weeks, breaking out on a technical basis partly due to a more dovish-than-expected Federal Reserve stance on interest rate policies, trade war speculation that fueled safe-haven bets and a relatively weak U.S. dollar that helped support demand for the USD-denominated gold bullion.
“The commodity team at Goldman Sachs is betting that rising emerging-market wealth combined with geopolitical and trade war concerns will push haven prices higher,” reports Barron’s. “Based on gold supply and demand dynamics, RBC Capital Markets’ gold analyst Christopher Louney forecasts an average price of $1,307 per ounce for gold for 2018.”