The price of gold is hovering just below its all-time high of $2,790.07 as the American dollar weakens and equity markets selloff around the world.
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Spot gold prices are now at their highest level in nearly three months, a sign that some investors are turning to the precious metal for safety amid growing market uncertainty. Geopolitical turmoil and inflation concerns under the new administration of U.S. President Donald Trump are reinforcing gold’s appeal as a hedge for investors.
At the same time, gold is getting a lift as the U.S. dollar declines and expectations grow for the U.S. Federal Reserve to hold interest rates steady at its upcoming policy meeting on Jan. 29. Markets are pricing in a more than 99% chance of no change in U.S. interest rates. No change would be supportive of gold, which benefits in a low-interest-rate environment due to its lack of yield.
U.S. Dollar Weakens
Gold’s currently trading at $2,745.30 per ounce, having gained nearly 3% so far this year. The precious metal is rising as technology stocks lead equity markets around the world lower. U.S. Treasury yields are down as investors seek safety from the tech stock selloff. The benchmark 10-year yield has dropped 11-basis points to 4.514%.
At the same time, the U.S. dollar index has slipped 0.28% to 107.16, close to a one-month low for the greenback. Commodities analysts say the technical and fundamental outlook for gold remains extremely bullish and that the precious metal could soon test of the $3,000 level. Gold’s safe-haven appeal is only growing with global economic uncertainty rising, say many analysts.
Is the SPDR Gold Shares ETF A Buy?
Below is a chart of the 12-month performance of the SPDR Gold Shares exchange-traded fund (GLD), one of the oldest and most widely held gold ETFs in the world. As one can see in the chart below, the GLD ETF has risen 36% over the past year, mirroring the increase in the spot price of gold itself.
