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Why Investors Should Take a Look at Gold in H2 2018

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Rough patch for gold

Gold prices have gone through a rough patch recently with prices closing near their seven-month lows. Gold is hitting lows despite many factors that are favoring its safe-haven status. Despite the escalation of trade war fears and political tensions in the European Union, gold prices have been trending lower. While these factors have helped gold, the US dollar is also attracting bids because of these factors, which has capped gold’s gains.

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Dollar’s strength is weighing on gold

The SPDR Gold Shares (GLD), which tracks physical gold prices, has lost 3.6% of its value year-to-date (or YTD), while the PowerShares DB US Dollar Index Bullish ETF (UUP), which provides exposure to the dollar’s futures contracts, has gained 3.3% in the same period. The Federal Reserve’s hawkish interest rate stance is also weighing gold down.

Miners turned negative too

The VanEck Vectors Gold Miners ETF (GDX) has seen returns of -3.0% as gold prices have remained weak. There are also company-specific factors to be considered. Goldcorp (GG), Newmont Mining (NEM), and Royal Gold (RGLD) are among the few gold miners with positive returns YTD.

Please read Five Gold Stocks Analysts Love—and Five They Don’t for more information on gold stocks that analysts favor in this market.

After gold’s prolonged weakness despite the geopolitical tensions, investors might be wondering how the gold prices will turn out in the second half of the year. In this series, we’ll explore the factors that are impacting gold in detail and assess the direction of gold prices going forward.

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