We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5-Year Best January Opening for Gold: ETFs in Focus
Read MoreHide Full Article
Gold prices kicked off the New Year in great fashion, logged the best January opening since 2013 andtouched its highest since late September. This move was a continuation of the year-end rally that led the precious metal to jump about 4.4% in the last three weeks of 2017.
Presently, gold prices are hovering around $1,300 an ounce. According to Mitsubishi analyst Jonathan Butler, "It is only the fourth time ever that gold has opened the year above $1,300." Geopolitical concerns related to North Korean premier Kim Jong-Un’s incendiary rhetoric as well as protests in Iran also led to gold’s recent gains as the metal is viewed as a safe-haven asset (read: What Does Kim Jong-Un's Speech Hold For Safe Haven ETFs?)
After faring better for the most part of the first nine of months of 2017, the metal started to falter from the fourth quarter. An upbeat global economy and hopes of tax reform in the United States marred the safe-haven demand of the metal. Plus, heightened prospects of a Fed rate hike boosted yields and the greenback. This in turn weighed on the non-interest-bearing asset like gold.
However, the slump was for a short while. Post Fed meeting, gold gained strength as the meeting was less hawkish than expected. Overall, gold bullion ETF SPDR Gold Shares (GLD - Free Report) gained about 13.3% in the last one year (as of Jan 2, 2017) (read: ETF Winners & Losers Post Partly Dovish Fed Meet).
What’s in Store?
The greenback’s lack of strength can be instrumental in driving gold’s future strength. The U.S. currency dropped to a four-month low against the euro on Jan 2, as the economy in the Euro zone is also gathering steam (read: After a Stellar 2017, Will Euro ETFs Beat Greenback in 2018?).
Though the Republican tax bill has been passed, it is largely priced in at the current level and traders are still confused as to how much gains can be reaped from this tax reform by the economy, if we go by an article published on MarketWatch.
Bottom Line
As of now, the metal seems due for a rally. So, investors intending to profit out of the new-found optimism in the gold space may consider gold ETFs like GLD, iShares Gold Trust (IAU - Free Report) and ETFS Physical Swiss GoldShares (SGOL - Free Report) .
For fatter returns, investors can also play leveraged products like VelocityShares 3x Long Gold ETN ,DB Gold Double Long ETN (DGP - Free Report) and ProShares Ultra Gold (UGL - Free Report) . However, leveraged ETF plays involve greater risk.
Having said that, we would like to note that the journey of gold largely depends on the global economic growth momentum and how fast inflation gathers momentum. If these factors materialize meaningfully, gold prices may succumb to a slowdown. And if demand from the key-consuming nations like India and China look up and geopolitical tensions flare up, we may see gold prices marching higher.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5-Year Best January Opening for Gold: ETFs in Focus
Gold prices kicked off the New Year in great fashion, logged the best January opening since 2013 andtouched its highest since late September. This move was a continuation of the year-end rally that led the precious metal to jump about 4.4% in the last three weeks of 2017.
Presently, gold prices are hovering around $1,300 an ounce. According to Mitsubishi analyst Jonathan Butler, "It is only the fourth time ever that gold has opened the year above $1,300." Geopolitical concerns related to North Korean premier Kim Jong-Un’s incendiary rhetoric as well as protests in Iran also led to gold’s recent gains as the metal is viewed as a safe-haven asset (read: What Does Kim Jong-Un's Speech Hold For Safe Haven ETFs?)
After faring better for the most part of the first nine of months of 2017, the metal started to falter from the fourth quarter. An upbeat global economy and hopes of tax reform in the United States marred the safe-haven demand of the metal. Plus, heightened prospects of a Fed rate hike boosted yields and the greenback. This in turn weighed on the non-interest-bearing asset like gold.
However, the slump was for a short while. Post Fed meeting, gold gained strength as the meeting was less hawkish than expected. Overall, gold bullion ETF SPDR Gold Shares (GLD - Free Report) gained about 13.3% in the last one year (as of Jan 2, 2017) (read: ETF Winners & Losers Post Partly Dovish Fed Meet).
What’s in Store?
The greenback’s lack of strength can be instrumental in driving gold’s future strength. The U.S. currency dropped to a four-month low against the euro on Jan 2, as the economy in the Euro zone is also gathering steam (read: After a Stellar 2017, Will Euro ETFs Beat Greenback in 2018?).
Though the Republican tax bill has been passed, it is largely priced in at the current level and traders are still confused as to how much gains can be reaped from this tax reform by the economy, if we go by an article published on MarketWatch.
Bottom Line
As of now, the metal seems due for a rally. So, investors intending to profit out of the new-found optimism in the gold space may consider gold ETFs like GLD, iShares Gold Trust (IAU - Free Report) and ETFS Physical Swiss Gold Shares (SGOL - Free Report) .
For fatter returns, investors can also play leveraged products like VelocityShares 3x Long Gold ETN , DB Gold Double Long ETN (DGP - Free Report) and ProShares Ultra Gold (UGL - Free Report) . However, leveraged ETF plays involve greater risk.
Having said that, we would like to note that the journey of gold largely depends on the global economic growth momentum and how fast inflation gathers momentum. If these factors materialize meaningfully, gold prices may succumb to a slowdown. And if demand from the key-consuming nations like India and China look up and geopolitical tensions flare up, we may see gold prices marching higher.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>