Gold Climbs Today, is There Opportunity in Gold ETFs (NYSEARCA:GLD)?

SPDR Gold Trust (ETF) (NYSEARCA:GLD) might follow the age-long market adage of climbing the wall of worry and sliding the slope of hope as fears about a September rate hike rise and fall. The Wall Street Journal reports that gold prices opened higher in European trade today as fears about when the U.S. Federal Reserve is likely to raise interest rates.


The WSJ reports that Spot gold prices were up 0.7% at $1,142.11 a troy ounce on the London Spot Market this morning. In fact, the yellow metal has hit a four-day high earlier in the session at $1,144.28 an ounce. Today’s gains continue the positive trend that has had gold climbing towards the symbolic resistance level of $1,150.

The yellow metal is starting to look attractive again after the investors hand traders have exhausted themselves in trying to time the market in relation to a September rate hike. Yesterday, spot gold climned 0.04% to $1,134 an ounce in U.S. markets despite views by Fed vice president Fischer that a September rate hike is probable because it makes sense.

Analysts see uptrend in sight for the SPDR Gold Trust (ETF)

Analysts are optimistic about the prospects of the bullion an SPDR Gold Trust (ETF) (NYSEARCA:GLD) going forward as the market enters September. The market seems to think raising of interest rates this month would be a decisive action that will lead gold to a bottom and remove much of the volatility. In contrast, if the Fed doesn’t raise rates this month, the market will be at peace at least until talks about a rate hike begins again in December.

Analysts at UBS say, “Gold has been closely tracking changes in Fed policy expectations of late and we expect this influence on price action to continue up ahead… The link is likely going to become more acute in the next two weeks as the September FOMC [Federal Open Market Committee] meeting draws near.”

Analysts at Barclays are also positive about the prospects of gold. They said, “Further support from U.S. rate expectations should… be limited, as the market is already pricing in a low probability of a September hike.

Howie Lee, an investment analyst at Phillip Futures believes that the market should see less volatility in gold prices going forward. In his words, “We still stand by our view that gold is likely to trade above $1,100 in the near-term and that the momentum right now is for gold to rally more than to fall.”

Is there an opportunity in gold ETFs?

Gold and the SPDR Gold Trust (ETF) (NYSEARCA:GLD) seems to be on track to have a pleasant run this week as the precious metal continues to trade above a more than five-year closing low of $1,084 that was reached on August 5 the China’s economy took a hit. Saxo Bank, in a research note that was released yesterday observed that last week’s short positions in the bullion were cut by 22% in contrast to a four-fold increase of 845,000 in long ounces.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.


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