Weakness in global markets and another round of trade worries reignited the safety trade with exchange traded funds tracking gold prices and the gold miners space rallying on Friday.
Among the best performing ETFs of Friday, the ETFMG Junior Silver Miners ETF (NYSEArca: SILJ) advanced 2.0%, VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) rose 1.8% and VanEck Gold Miners ETF (NYSEArca: GDX) gained 1.0%.
Meanwhile, the SPDR Gold Shares (NYSEArca: GLD) was up 0.4% as Comex gold futures rose 0.3% to $1,318.6 per ounce, and the iShares Silver Trust (NYSEArca: SLV) was 0.4% higher as Comex silver futures increased 0.6% to $15.8 per ounce.
Gold traders argue that growing concerns over global growth could provide support as a safety hedge against further volatility. President Donald Trump on Thursday fueled concerns when he announced he did not plan to meet Chinese President Xi Jinping before the March 1 deadline set for reaching an agreement.
Additionally, global growth fears reappeared after the European Union cut its economic growth outlook and the Bank of England warned that Britain could experience its weakest economic growth in a decade.
“The two big headwinds we are looking at is weakening data out of the eurozone and some uncertainty around the trade dispute with China creeping back into the markets,” Shawn Cruz, manager of trader strategy at TD Ameritrade, told Reuters.
Meanwhile, a more dovish stance on monetary policy out of the European Central Bank and Federal Reserve also helped bolster the gold outlook since further rate hikes would diminish the appeal of a non-yielding hard asset like precious metals.
“The fact that we are seeing major central banks turn dovish at the same time is probably alarming for some investors, which may explain why stocks have failed to sustain their rally. But this is good news for bonds and therefore noninterest-bearing and low-yielding assets such as gold and silver,” said Fawad Razaqzada, market analyst at Forex.com, in a note.
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