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What Could Help Gold Make a Comeback in 2017

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1 2 3 4 5 6 7 8 9 10 11 12
Part 6
What Could Help Gold Make a Comeback in 2017 PART 6 OF 12

Are Tech Stocks Dulling Gold?

Risk-on sentiment

Equity markets (SPY) (SPX) (DOW) have mostly been on an upswing after the US presidential election. While money has flowed out of gold ETFs, it’s been flowing into equities and equity-backed ETFs. Among equities, tech stocks (XLK) have been the top trade in May. The market has surged, boosted by stocks such as Amazon (AMZN), Apple (AAPL), Facebook (FB), and Alphabet (GOOG).

Are Tech Stocks Dulling Gold?

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Tech stocks take the lead

According to Bank of America Merrill Lynch’s Global Fund Manager Survey, the “long NASDAQ” trade is the most crowded trade right now. Tech stocks have driven the NASDAQ’s gains, with have surpassed the Dow’s, the S&P 500’s, and the Russell 2000’s so far this year. The strong rebound of equities, especially tech stocks, has dulled gold.

Safe-haven assets are falling

In a risk-on environment, gold and other safe-haven assets aren’t expected to do well. As expected, precious metals have delivered a lukewarm performance. This situation can change quickly, however, with any major uncertainty or negative event.

Gold price weakness manifests itself in gold miners’ share prices as well. Affected miners (RING) include IAMGOLD (IAG), Coeur Mining (CDE), Harmony Gold (HMY), Kinross Gold (KGC), and Yamana Gold (AUY).

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