Holdings in the Bullion-Backed ETFs Will Likely Rise



US economy

It looks like gold prices seem to be in a consolidation mode. The big gains on Thursday, August 27 weren’t as positive for gold as other commodities. The positive US economic data pushed the oil and metals higher. However, it dulled trader’s interest in safe-haven assets. Gold has been under pressure in recent months. Some investors wagered that an expected rise in US borrowing costs would push prices lower.

The above chart shows the price of gold for the last month. It shows the currently rising gold-silver spread. This indicates that it takes more silver ounces to a single gold ounce. Gold is strong.

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Gold for December delivery, the most actively traded contract, fell 0.20% to settle at $1,122.60 per troy ounce in the COMEX division of the NYMEX. Spot gold rose 0.18% at $1,122.60 per ounce. It traded within a narrow range. It had a high of $1,128.50 and a minimum of $1,117. Silver for September delivery rose 2.55% to $14.47 per ounce as of August 27.

Spot platinum rose 2.63% to $1,006 per ounce. It trimmed the losses from earlier in the week ending August 28. Spot palladium has been retreating after the staggering losses at the beginning of the week. It rose 7.35% and 3.92% on August 27 and 28, respectively.

Bullion-backed ETFs

Portfolio managers and retail investors may prefer avoiding gold investments. Gold is lackluster due to the existing deflation fears around the world. More than $52 billion was wiped out from the value of physical bullion funds early in the week ending August 28. However, holdings in the bullion-backed ETFs rose to a one-month high on August 27 as the equities headed for the worst monthly performance since May 2012.

The SPDR Gold Shares ETF (GLD) and the iShares Gold Trust ETF (IAU) rose 3.71% and 3.78%, respectively, on a 30-day trailing basis as of August 31.

Mining companies are buoyant

Mining stocks have seen a mixed performance during the past month. However, most of them have seen slightly negative returns on a 30-day trailing basis. Companies like Yamana Gold (AUY) and Silver Wheaton (SLW) fell while Alacer Gold (ASR) and New Gold (NGD) rose. Yamana Gold, Silver Wheaton, Alacer Gold, and New Gold account for ~12% to the VanEck Vectors Gold Miners ETF (GDX).


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