As Dollar Takes a Breather, Take a Look at This Gold Explorers ETF

As the Federal Reserve continues to implement a wait-and-see strategy on interest rates, gold is creeping higher and funds like the Global X Gold Explorers ETF (GOEX) are gaining strength.

Inflation fears continue to circulate in the capital markets, allowing bullish gold investors to boost the fund’s near-term performance. Any dips that do occur are giving investors an opportunity to play gold via mining and exploration ETFs like GOEX.

“People are using the correction to buy gold, at these price levels, there is value to hold positions in gold, especially for the long run,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

GOEX Chart

Rather than buying the commodities themselves, miners are also an option for ETF investors seeking to get precious metals exposure. In addition, miners can offer less exposure to price volatility, particularly when heavy selling can push prices lower swiftly.

GOEX seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Global Gold Explorers & Developers Total Return Index, which is a free float-adjusted, liquidity-tested and market capitalization-weighted index that is designed to measure broad-based equity market performance of global companies involved in gold exploration.

Is a Gold Comeback Underway?

Gold was one of the highlights of 2020 as investors flooded the precious metals market to seek refuge in safe haven assets. As global vaccinations began later in the year, gold eventually lost its luster as renewed risk entered the markets heading into 2021.

Gold has been on a downtrend since March, but there are signs that the precious metal could be making a comeback. While the notion is that rising interest rates should push the dollar higher, the Federal Reserve recently opted to stand pat, saying that probable rate increases won’t occur for two more years.

“Gold on Monday clawed back some losses from its biggest weekly percentage drop since March 2020, as a pause in the U.S. dollar’s rally helped restore the metal’s allure,” a recent CNBC article noted.

“Gold prices fell 6%, or $113 an ounce, last week as the U.S. Federal Reserve signaled it would soon start tapering its asset purchases and could start raising interest rates in 2023,” the article added. “But the dollar index has retreated from 2-1/2-month highs, prompting investors to turn to gold, which fell for six straight sessions before Monday’s bounce.”

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