Waiting on commentary from the Federal Reserve, gold exchange traded products, including the SPDR Gold Shares (NYSEArca: GLD), traded slightly lower Thursday. Some market observers believe gold could struggle despite the results of Tuesday’s midterm elections.
“That’s the view of money managers including Stephen Land of Franklin Templeton Investments, who say concerns that the Federal Reserve will continue raising rates will overshadow any short-term boost to haven demand from Tuesday’s midterm vote,” reports Bloomberg. “The dollar and U.S.-China relations are also likely to reassert themselves as catalysts, they say.”
That could stymie investors’ recent renewal of affinity for gold ETFs. For starters, global gold-backed ETFs and similar products attracted $1.0 billion in net inflows, following the deceleration that started in September. Meanwhile, global assets under management climbed 3.1% from September.
Supporting the sudden surge, gold experienced a positive price performance of 2.3%, which the World Gold Council argued was a key driver of inflows in North American and European funds, closing out the month with inflows of $561 million – an 1.2% increase in AUM, and $678 million – a 1.7% increase in AUM, respectively.
What’s Next for Gold?
Much of the near-term thesis for gold revolves around the Fed’s plans for interest rates. The Fed has boosted borrowing costs three times this year and market observers widely expect a fourth rate hike in December. However, President Trump has not been shy about saying he would like to see the Fed slow its pace of rate increases.