Investors Seek Safe-haven in Gold

Investors Seek Safe-haven in Gold

$GLD, $XAU, $USD

The world’s biggest bullion-backed ETF (exchange-traded fund) is getting focus. Holdings in SPDR Gold Shares (GLD) surged by the most in almost 3 years as the US-China trade dispute, signs of a slowdown, and speculation the Fed will cut rates combined to drive demand.

Assets in the SPDR ETF jumped 16.44 tonnes, or 2.2%, Monday to post the biggest gainer since July 2016, while a tally of holdings in all ETFs saw the biggest increase this year. The swing toward the traditional safe-haven came as gold prices surged above $1,300 oz to marking the highest since February.

Gold’s had a modest year so far even as trade concerns flared, with Fed policy makers signalling rates were on hold and USD gaining ground in the 4 months to May.

Monday, St. Louis Fed President James Bullard weighed in, saying a cut may be warranted soon, and markets are now discounting at least two quarter-point reductions by year-end. Gold tends to benefit from a low-rate environment.

“Gold is once again trying to reclaim its role as a safe haven amid growing trade tensions and consequent risks to growth,” a strategist at UBS Group AG, said in a note Monday. The price “looks like it is getting comfortable above $1,300, with aspirations of testing this year’s highs.”

Tuesday, there were more signs of macro weakness from across Asia as revised data showed SKorea’s economy shrank 0.4% in Q-1, the worst performance since the 2007/2008 financial crisis, while the purchasing managers index in trade-dependent Singapore dropped below 50.

Gold finished +0.5% to $1329.25 oz Tuesday.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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