As gold pushes to new highs, it could get an extra shove in the back from the U.S. Federal Reserve. A slowdown in interest rate hikes could be a major catalyst for gold prices to move even higher.
In an effort to tame inflation, the Fed has been pushing rates higher but without hampering economic growth. There could be emerging cracks in the strategy, which could finally cause the Fed to pivot and pump the brakes on its rate-hiking.
“Yields are starting to look toward the Fed to pivot, and it looks like gold’s just ready to break out. I think these boomer rocks, they’re set up for a boom,” said Mike McGlone, Bloomberg Intelligence senior macro strategist, in a Yahoo! Finance report.
“The key thing that has pressured gold the past 10 years or so has been the U.S. stock market outperforming the world,” said McGlone. “The key trigger will be when the U.S. stock market continues to underperform the rest of the world, and gold will be the shining star.”
Get Safe Haven Exposure Via Gold
Market volatility hasn’t quite escaped investors in 2023 after last year’s market tumult. As such, gold remains a prime alternative when it comes to potential market movements towards the downside.
“When things get scary out there, investors run to safe havens, and gold is basically one of those major safe havens,” Gareth Soloway, chief market strategist at Inthemoneystocks.com and verifiedinvesting.com, recently told Yahoo Finance.
Sprott offers a variety of ways to get gold exposure. One is the Sprott Physical Gold Trust (PHYS), which is a fund that provides an enhanced physical bullion structure, offering the ease of purchase and sale that comes with being traded on an exchange.
For an alternate play on gold prices via ancillary gold services like mining, investors can also consider the Sprott Gold Miners ETF (SGDM ). If demand continues to rise for gold, this can have a domino effect on miners for indirect exposure to gold prices.
Per SGDM’s fund description, the ETF seeks investment results that correspond generally to the performance of its underlying index, the Solactive Gold Miners Custom Factors Index. The index aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges.
Lastly, investors seeking an environmental, social, and governance (ESG) element in their gold exposure can consider the Sprott ESG Gold ETF (SESG ). The fund reflects the performance of the price of gold by holding physical gold bullion that meets certain ESG standards and criteria determined by Sprott Asset Management and is defined as “Sprott ESG Approved Gold."
The ETF is expected to consist primarily of fully allocated unencumbered physical gold bullion held by the Mint on behalf of the ETF as Sprott ESG Approved Gold. Overall, it seeks to address the growing global demand for sustainable, transparent investment strategies that align with ESG values and investment objectives.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.