Precious metals and their corresponding ETFs are gaining momentum on Tuesday, as gold attempts to break this year’s downturn and silver tries to move toward February’s highs.
Gold is trading at $1715.20 per ounce, up 2.22%, while silver has managed to rally above $26/oz for a 3.35% gain. Meanwhile, gold and silver ETFs are gaining on Tuesday, with the SPDR Gold Shares (GLD) gaining 2.17% and the iShares Silver Trust (SLV) adding 3.65%.
Precious metals have had a tough time this year, as stocks have continued to rally. But with interest rates climbing recently, some analysts see more upside ahead.
The market is leery that all the additional stimulus will be inflationary. For the metals, inflation should be supportive, as should stimulus spending.
According to fastmarkets.com, “As we have been saying of late, this correction should let us see how strong underlying demand really is by seeing how far prices pull back and how long they pullback for. We remain medium-term bullish on the back of another super-cycle, this time driven by the electrification theme.”
“Gold prices are finding some support this morning, but are generally trending lower because of the run-up in bond yields has increased the opportunity cost of holding gold. The strong dollar will be another factor weighing on gold, but a cheaper gold price will make for a cheaper safe-haven should broader markets correct further.”
Other analysts are more concerned about additional downside in metals however, especially in silver, which has fared better than gold in 2021.
“The Gold/silver ratio has recently made an attempt to settle below the support at the 20 EMA at 66.40 but failed to develop sufficient downside momentum and moved back to the 67 level. The nearest significant resistance level for gold/silver ratio is located at the 50 EMA at 68.70. If gold/silver ratio gets to the test of this level, silver will find itself under more pressure,” according to Vladimir Zernov at Yahoo! Finance.
“As much as many continue to look for higher metal prices, they all should continue headed south. There is no reason to believe that the current down trend is changing anytime soon although it is inevitable that it will. The only question is when?” wrote Todd Horwitz of Kitco.
“Traders that can be objective without bias have success, those that insist on be right almost always lose. Until proven otherwise, we are short all of the metals and will be short until there is a reason to buy, which for now looks far away,” Horwitz added.
Investors looking to allocate silver and into their portfolios through ETFs have several options. The iShares Silver Trust (SLV) is a popular silver choice and recently boasted $171.1 million dollars in inflows. The iShares Gold Trust (IAU) is another choice for gold investors, along with the SPDR Gold Shares (GLD).
Aberdeen also has quite a collection of metals ETFs, including those focused on silver. Aberdeen’s suite includes the Aberdeen Standard Gold ETF Trust (SGOL), which comes with a 0.17% expense ratio, and the Aberdeen Standard Physical Silver Shares ETF (SIVR), which has a 0.30% expense ratio. Additionally, the Aberdeen Standard Physical Precious Metals Basket Shares (NYSEArca: GLTR), which has a 0.60% expense ratio, offers a cornucopia of metals including gold, silver, platinum, and palladium.
For more market trends, visit ETF Trends.