$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.
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