Core Viewpoint - Gold prices are on an upward trajectory, with expectations of breaching $4,000 per ounce by early 2026, driven by factors such as government uncertainty, a weaker U.S. dollar, and anticipated interest rate cuts [1][2]. Group 1: Market Performance - Gold has achieved its seventh consecutive week of gains, reaching an all-time high of $3,880.8 per ounce, marking a yearly increase of over 47% [2]. - Inflows into gold exchange-traded funds (ETFs) this year are the highest since 2020, indicating strong investor interest [7]. Group 2: Economic Influences - The Federal Reserve is expected to cut interest rates in October and December, which could support gold prices by reducing the opportunity cost of holding non-yielding assets [4]. - The U.S. dollar is experiencing a significant decline, projected to have its worst annual drop since the 1970s, further supporting gold's appeal [4]. Group 3: Investment Trends - The SPDR Gold Trust ETF, the largest ETF backed by physical gold, has seen consistent weekly inflows, reflecting strong demand [8]. - Notable performers in the gold investment space include ProShares Ultra Gold and DB Gold Double Long ETNs, both of which have increased by over 90% this year [9].

Economic Overview - The economy added only 73,000 jobs in July, significantly below the expected 104,000, with prior months' job gains revised down by a total of 258,000, leading to an increase in the unemployment rate to 4.2% [2] - Manufacturing activity has contracted, with factory hiring at its lowest since 2020, and consumer confidence has weakened, raising concerns about a potential economic slowdown or recession [2] - Analysts have increased the odds of interest rate cuts in September due to the combination of weak economic data [2] Federal Reserve and Interest Rate Expectations - The CME's FedWatch tool indicates an 87.4% probability of a 25-basis point rate cut in September, driven by weak data and declining consumer activity [1] - President Trump's nomination of Stephen Miran to the Federal Reserve Board is expected to reinforce dovish market expectations, potentially leading to earlier rate cuts [3] - JPMorgan has adjusted its forecast to expect the first rate cut in September, projecting a total of four cuts through early 2026 [3] Impact of Lower Interest Rates - Lower interest rates are anticipated to reduce borrowing costs, aiding business expansion and increasing profitability, which in turn stimulates economic growth and supports the stock market [4] - High dividend-yield sectors, particularly utilities and real estate, are expected to benefit significantly from rate cuts due to their sensitivity to interest rates [5] - Lower rates are likely to enhance consumer discretionary spending and encourage lending in the financial services sector, despite potential compression of net interest margins for banks [6] Sector-Specific Opportunities - Small-cap companies are expected to outperform in a lower-rate environment due to higher levels of debt, and rate cuts may boost foreign capital inflows into emerging markets like India [7] - Gold is projected to gain attractiveness as lower interest rates increase its appeal [7] Highlighted ETFs - **Vanguard Real Estate ETF (VNQ)**: Targets the real estate segment with an AUM of $33.5 billion, holding 155 stocks, and charges 13 bps in fees [9] - **Utilities Select Sector SPDR (XLU)**: AUM of $21.2 billion, focusing on utility companies, with 31 stocks and 8 bps in annual fees [10][11] - **Consumer Discretionary Select Sector SPDR Fund (XLY)**: AUM of $22.3 billion, covering the consumer discretionary space with 51 securities and 8 bps in fees [12] - **iShares Russell 2000 ETF (IWM)**: Largest small-cap ETF with an AUM of $60.4 billion, holding 1,979 stocks and charging 19 bps in fees [13] - **SPDR Gold Trust ETF (GLD)**: Tracks gold prices with an AUM of $104 billion and charges 40 bps in fees [14]

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].