Investors Flock to Gold ETFs

Gold exchange-traded funds are regaining their luster.

Investors poured about $2.6 billion into gold-backed ETFs in July, increasing their collective holdings to 2,600 tons—the highest total since March 2013, data from the World Gold Council show.

The price of the precious metal has surged 17% over the past three months and recently eclipsed $1,500 a troy ounce for the first time in six years. Investors have flocked to haven assets, like gold, amid renewed anxiety over slowing global growth and a flare-up in trade tensions.

The rally has also come as the Federal Reserve shifted its policy stance and cut interest rates for the first time in a decade. Expectations of lower borrowing costs tend to boost gold, which struggles to compete with yield-bearing assets when rates rise.

Investors are continuing to flock to the funds. About $2 billion has flowed into the

SPDR Gold Trust

—the world’s largest gold ETF—over the past month, accounting for more than two-thirds of its total inflows in 2019, according to FactSet.

They put an additional $894 million into the

iShares Gold Trust

in that span, representing more than half of its 2019 inflows.

Both ETFs have gained roughly 7.5% apiece over the past month, versus gold’s 7.7% rally and the S&P 500’s 5.5% decline.

Some analysts and investors expect gold to continue moving higher in the near term, as investors use it as a hedge against economic uncertainty. It rose 0.2% to $1,519.60 Thursday, the highest level since April 2013.

“This has been one of the best environments for gold in the past half decade,” said

Ryan Giannotto,

director of research at GraniteShares. “Lower rates, coupled with uncertainty surrounding Fed policy, is going to continue to be a positive for gold beyond the immediate future.”

Shares of smaller gold miners may offer more opportunities for investors compared with their larger counterparts, which are trading close to fair values, according to analysts at JPMorgan Chase & Co. The firm raised its price targets this week on

Agnico Eagle Mines
Ltd.

,

Eldorado Gold
Corp.


EGO -1.14%

,

Franco-Nevada
Corp.


FNV -0.37%

and

NovaGold Resources
Inc.


NG -2.42%

Each of those stocks have rallied at least 9.6% since mid-July.

Larger counterpart

Barrick Gold
Corp.

has also fared well, climbing 15% in that span.

To receive our Markets newsletter every morning in your inbox, click here.

Write to Jessica Menton at Jessica.Menton@wsj.com

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

]

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *