Alternative Investments: Investors Back up the Truck On The World’s Largest Gold ETF
The yellow metal is nudging an eight-year-old high as investors plow billions into gold funds.
According to the World Gold Council (WGC), it appears that investors really loaded up on gold ETF shares on Friday. Investors bought up 27.3 tonnes (974,000 ounces worth more than $1.7 billion at Monday’s prices) of gold via ETFs, the WGC said. (Mining.com) The single biggest beneficiary of investors’ gold fixation was the SPDR Gold Shares (NYSEARCA: GLD) ETF, which received inflows of 23.1 tonnes or 742,492 ounces.
What’s driving investor interest in gold?
Top of mind for investors must be the concerns from the sharp spike in the number of COVID infections upon relaxation of lockdown restrictions.
Infections in Arizona have shot up 54% in the course of a week. Meanwhile, over 22 of 50 U.S. states are reporting rising infection numbers in a worrisome trend. According to the University of Washington, which developed a new prediction model, by October 1, 200,000 Americans may die from the virus.
According to the World Health Organization, Sunday saw the single biggest increase in COVID-19 cases globally.
These statistics appear to be confirming the often-expressed premonitions of the second wave of infections in the pandemic. Panicking investors are likely seeking shelter from the storm in safe-haven gold.
On Friday, Goldman Sachs (NYSE: GS) forecast that the precious metal could surge higher by another $250 in the coming six months due to the massive global stimulus unleashed by governments. The investment banking giant said that in a year’s time, gold could touch $2,000.
Investors should also keep an eye open for declines in the U.S. dollar due to the massive stimulus, low-interest rates, and economic weakness. Weakness in the dollar is bullish for gold, and hence for the GLD ETF.
GLD – technical picture
On the daily chart of the GLD ETF, it appears certain that it will break out of the rectangle consolidation (bounded inside two black horizontal lines) to the upside.
A further bullish move could then follow.
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