Gold Set to Shine Again: ETFs to Tap the Momentum

Core Viewpoint - Gold is experiencing a resurgence in momentum due to fears of a U.S. economic slowdown, weak labor data, and expectations of Federal Reserve rate cuts, leading to a rise of over 3% in gold prices over four days [1][5]. Economic Data - The U.S. economy added only 73,000 jobs in July, significantly below the expected 104,000, with prior months' job gains revised down by 258,000, raising recession fears [3]. - The services sector index fell to 50.1 in July from 50.8 in June, indicating a near standstill in business activity due to weak demand and rising costs [4]. Federal Reserve Rate Cuts - The weak economic data has increased the likelihood of the Federal Reserve lowering interest rates in September, with a 92% probability indicated by market tools [5]. - Lower interest rates enhance the attractiveness of gold as a non-yielding asset compared to fixed-income investments [5]. Tariffs and Safe-Haven Buying - The Trump administration's recent tariff hikes, ranging from 15% to 40% on various countries, have spurred safe-haven buying of gold [6]. - The inflationary pressures from these tariffs are expected to bolster gold's status as a hedge against rising prices [7]. Currency and Central Bank Activity - A weaker U.S. dollar and increased central bank purchases are contributing to the rise in gold prices, with 95% of central banks expecting to increase their gold reserves in the next year [8]. Gold Price Forecasts - Citigroup has raised its 3-month gold price forecast to $3,500 per ounce from $3,300, citing economic deterioration, rising inflation, and changing tariffs [9]. ETFs Performance - Gold ETFs such as SPDR Gold Trust ETF (GLD), iShares Gold Trust (IAU), and others are expected to perform well due to rising gold prices [2][10]. - SPDR Gold Trust ETF has an AUM of $103 billion and trades about 9 million shares daily, while iShares Gold Trust has an AUM of $33 billion with 6 million shares traded daily [11][12]. - Other notable ETFs include SPDR Gold MiniShares Trust (AUM: $16.2 billion), abrdn Physical Gold Shares ETF (AUM: $5 billion), and iShares Gold Trust Micro (AUM: $3.3 billion) [13][14][15]. Conclusion - Given the prevailing economic uncertainty and potential Fed rate cuts, interest in gold ETFs is likely to remain strong in the upcoming months [16].