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Gold has been shining in recent months, buoyed by safe-haven demand amid recession fears and the banking turmoil. The Fed rate hike pause bets, lower Treasury yields and a weaker dollar also added to the strength.
The most actively traded gold-futures contract rose to $2,055.30 an ounce, up about 13% year-to-date. That has put the bullion within striking distance of its record high reached in the summer of 2020. After logging the best monthly performance since July 2020, gold is on track for the second consecutive gain in April (read: Gold Shines in March: 5 ETFs That Gained the Most).
With the rise in prices, almost all gold ETFs hit a new 52-week high in the last trading session. We have highlighted the most popular ones that are flying high. These include SPDR Gold Trust ETF (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM - Free Report) , Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL - Free Report) and iShares Gold Trust Micro (IAUM - Free Report) . Each of these funds gained 10.4% from a year-to-date look.
Behind the Rise in Gold Price
The latest batch of economic data points to a slowdown in the economy, prompting bets that the Federal Reserve is nearing the end of its rate-hike cycle. The yellow metal is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding a non-yielding bullion. A pause or slowdown in the pace of rate hikes will lift gold price higher. The CME FedWatch tool shows markets are pricing in a 66.8% chance of a 25 basis-point hike in May, with rate cuts seen in the back half of the year.
Additionally, the recent collapse of several U.S. banks led to worries about financial instability across the globe, thus raising the appeal for the yellow metal as a safe haven and a store of value. Growing recession fears and intensifying geopolitical tensions compelled investors to flock to gold. The International Monetary Fund warned that the risk of a recession has grown for advanced economies in the wake of bank failures in the United States and Europe and slashed its outlook for global growth this year.
The dollar index slid to a one-year low, supporting the rally in the gold price as a weak dollar makes bullion cheaper for overseas buyers. Further, a boost in gold buying by central banks this year has added fuel to the rally.
Here’s a detailed discussion on the five ETFs mentioned earlier:
SPDR Gold Trust ETF tracks the price of gold bullion measured in U.S. dollars and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF, with AUM of $60 billion and a heavy volume of about 7.6 million shares a day.
SPDR Gold Trust ETF charges 40 bps in fees per year from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 5 ETFs to Play as Inflation Cools Down to 5%).
iShares Gold Trust offers exposure to the day-to-day movement of the price of gold bullion. It is backed by physical gold under the custody of JP Morgan Chase Bank in London.
iShares Gold Trust charges 25 bps in annual fees. It is liquid and popular, trading in average daily volumes of 5 million shares and has AUM of $29 billion.
SPDR Gold MiniShares Trust seeks to reflect the performance of the price of gold bullion. It is a slightly modified alternative to the State Street behemoth gold fund SPDR Gold Trust ETF.
SPDR Gold MiniShares Trust is the low-cost choice in the U.S. listed physically gold-backed ETF space, charging investors 10 bps in annual fees. It has $6.2 billion in AUM and trades in a solid average daily volume of 1.2 million shares.
Aberdeen Standard Physical Swiss Gold Shares ETF tracks the price of gold bullion. The Trust holds allocated physical gold bullion bars stored in secure vaults in Zurich, Switzerland and London, the United Kingdom.
Aberdeen Standard Physical Swiss Gold Shares ETF has amassed $2.7 billion in its asset base and trades in a solid volume of 2.5 million shares per day. It charges 17 bps in annual fees per year.
iShares Gold Trust Micro offers exposure to the day-to-day movement of the price of gold bullion. It is the lowest-cost gold ETF on the market, having an expense ratio of 0.09% (read: Can Gold ETFs Continue Their Winning Run?).
iShares Gold Trust Micro has amassed $1 billion in its asset base while trading in an average daily volume of 428,000 shares.
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Gold ETFs Hit New 52-Week Highs
Gold has been shining in recent months, buoyed by safe-haven demand amid recession fears and the banking turmoil. The Fed rate hike pause bets, lower Treasury yields and a weaker dollar also added to the strength.
The most actively traded gold-futures contract rose to $2,055.30 an ounce, up about 13% year-to-date. That has put the bullion within striking distance of its record high reached in the summer of 2020. After logging the best monthly performance since July 2020, gold is on track for the second consecutive gain in April (read: Gold Shines in March: 5 ETFs That Gained the Most).
With the rise in prices, almost all gold ETFs hit a new 52-week high in the last trading session. We have highlighted the most popular ones that are flying high. These include SPDR Gold Trust ETF (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM - Free Report) , Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL - Free Report) and iShares Gold Trust Micro (IAUM - Free Report) . Each of these funds gained 10.4% from a year-to-date look.
Behind the Rise in Gold Price
The latest batch of economic data points to a slowdown in the economy, prompting bets that the Federal Reserve is nearing the end of its rate-hike cycle. The yellow metal is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding a non-yielding bullion. A pause or slowdown in the pace of rate hikes will lift gold price higher. The CME FedWatch tool shows markets are pricing in a 66.8% chance of a 25 basis-point hike in May, with rate cuts seen in the back half of the year.
Additionally, the recent collapse of several U.S. banks led to worries about financial instability across the globe, thus raising the appeal for the yellow metal as a safe haven and a store of value. Growing recession fears and intensifying geopolitical tensions compelled investors to flock to gold. The International Monetary Fund warned that the risk of a recession has grown for advanced economies in the wake of bank failures in the United States and Europe and slashed its outlook for global growth this year.
Notably, gold is often used as a means of preserving wealth during times of financial and political uncertainty. It usually does well when other asset classes struggle (read: 4 ETF Areas to Benefit as Geopolitical Concerns Intensifying).
The dollar index slid to a one-year low, supporting the rally in the gold price as a weak dollar makes bullion cheaper for overseas buyers. Further, a boost in gold buying by central banks this year has added fuel to the rally.
Here’s a detailed discussion on the five ETFs mentioned earlier:
SPDR Gold Trust ETF (GLD - Free Report)
SPDR Gold Trust ETF tracks the price of gold bullion measured in U.S. dollars and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF, with AUM of $60 billion and a heavy volume of about 7.6 million shares a day.
SPDR Gold Trust ETF charges 40 bps in fees per year from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 5 ETFs to Play as Inflation Cools Down to 5%).
iShares Gold Trust (IAU - Free Report)
iShares Gold Trust offers exposure to the day-to-day movement of the price of gold bullion. It is backed by physical gold under the custody of JP Morgan Chase Bank in London.
iShares Gold Trust charges 25 bps in annual fees. It is liquid and popular, trading in average daily volumes of 5 million shares and has AUM of $29 billion.
SPDR Gold MiniShares Trust (GLDM - Free Report)
SPDR Gold MiniShares Trust seeks to reflect the performance of the price of gold bullion. It is a slightly modified alternative to the State Street behemoth gold fund SPDR Gold Trust ETF.
SPDR Gold MiniShares Trust is the low-cost choice in the U.S. listed physically gold-backed ETF space, charging investors 10 bps in annual fees. It has $6.2 billion in AUM and trades in a solid average daily volume of 1.2 million shares.
Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL - Free Report)
Aberdeen Standard Physical Swiss Gold Shares ETF tracks the price of gold bullion. The Trust holds allocated physical gold bullion bars stored in secure vaults in Zurich, Switzerland and London, the United Kingdom.
Aberdeen Standard Physical Swiss Gold Shares ETF has amassed $2.7 billion in its asset base and trades in a solid volume of 2.5 million shares per day. It charges 17 bps in annual fees per year.
iShares Gold Trust Micro (IAUM - Free Report)
iShares Gold Trust Micro offers exposure to the day-to-day movement of the price of gold bullion. It is the lowest-cost gold ETF on the market, having an expense ratio of 0.09% (read: Can Gold ETFs Continue Their Winning Run?).
iShares Gold Trust Micro has amassed $1 billion in its asset base while trading in an average daily volume of 428,000 shares.