Gold prices are up 22% for the year after reaching new highs. More upside could be on the way, with a confluence of factors providing enough tailwinds to push the precious metal to greater heights.
The yellow metal rallied to start the year, climbing above $2,400 per ounce in April before tapering off, then hitting above that price marker again before the summer. A typically slow summer market saw gold trade mostly sideways before pushing past the $2,500 mark after the most recent market volatility.
Aug.5 was a particularly heavy sell-off day as renewed recessions fears spooked the markets following a July jobs report that revealed slow growth and high unemployment. Markets have since recovered from the sell-off, but the volatility renewed the markets’ love for gold as a safe haven asset.
“Gold has moved in tandem with equities this month, but it fell less aggressively during the selloff and outpaced the wider rally,” confirmed the Wall Street Journal, quoting FxPro Senior Market Analyst Alex Kuptsikevich.
Outside of market movements, geopolitical tensions are also sparking gold demand. Gold has also been supported by central bank buying, which has kept prices afloat when profit-taking took place.
With a U.S. presidential election forthcoming, gold can serve as a safe haven asset when markets get roiled with volatility. The prospect that rate cuts should translate to dollar weakness also provides another catalyst for gold’s upside.
Capture the Upside With Miners
With the potential for gold to continue its upward trajectory, investors have options as opposed to investing directly in the precious metal itself. Investors can opt for gold-focused ETFs, or ETFs that offer a backdoor play on gold prices. This is available via gold miners, or more specifically, the Sprott Gold Miners ETF (SGDM ) and the Sprott Junior Gold Miners ETF (SGDJ ).
SGDM seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of large gold companies found on Canadian and major U.S. exchanges.
For investors looking to capitalize on the potential of small-caps, SGDJ tracks the Solactive Junior Gold Miners Custom Factors Index. It follows the performance of the small-cap precious metal companies, allowing for greater growth potential. Small-caps have the propensity to make amplified moves toward the upside when the broader market is trending higher, making this an ideal option for those who also want small-cap exposure.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
