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Top Trading Opportunities for Gold Bugs

Mon, Aug. 28, 2017 Posted: 01:18 PM

The price of gold has steadily been rising towards the end of August. Currently hovering at the $1,300 per ounce level, the price of gold has gained on growing uncertainty in stock markets. The Dow Jones, S&P 500 Index, Nasdaq Composite Index, and NYSE have performed sub-optimally in August, with 1-month declines across all indices including the Dow Jones. Gold naturally benefits from this uncertainty and it has rallied accordingly.

• On August 1, 2017, the Dow Jones was trading at 21,963.92 and by August 28, 2017 was at 21,843.15.
• On August 1, 2017, the S&P 500 Index was trading at 2,476.35 and by August 28 was trading at 2,443.05.
• On August 1, 2017, the NASDAQ Composite Index was trading at 6,362.94 and by August 28 was trading at 6,278.31.
• On August 1, 2017, the NYSE was trading at 12,000.02 and by August 28 was trading at 11, 812.03.

The performance of gold is inversely correlated with the performance of equities markets. As a case in point, gold was trading at $1,298.00 per ounce on August 28, 2017 – for a 30-day gain of 2.04%. On Friday 28 July 2017 gold was trading at $1,268.40 per ounce and the precious metal has appreciated by $30 per ounce over the month. The sharp rise in the gold price is a result of several geopolitical factors, namely escalating tensions with North Korea and the US. Additionally, there are growing concerns about the inefficacy of the Trump Presidency. As the White House battles to find its way – opponents are seizing on the difficulties to delegitimize the Trump administration with a barrage of scathing media attacks.

Reasons the Gold Price is Moving Higher

At the start of the week, on Monday 28 August 2017 there was significant interest in gold and silver. Industries, investors and jewellers ploughed money into these precious metals – helping prices to rise. Trade-24 financial analyst, Susan B. Nordham believes the rise in the price of precious metals is directly attributed to President Trump, ‘As we have seen so many times before, markets are reactive to Trump’s threats. Every time he Tweets we see markets move. Lately, this trend has tended towards safe-haven assets like gold, silver, and the JPY. Now, we are seeing Trump offering to terminate NAFTA and force a government shutdown. If these threats are viable, we will see the price of gold break through, and hold above $1,300 per ounce.’

A barometer of gold trading activity, the SPDR Gold Shares ETF is the largest gold ETF in the world with some 805.20 metric tonnes of gold. It has a current market value of $33,264,864,123.60. This gold ETF is a good barometer of overall market sentiment. When traders are looking for clues about speculative sentiment, SPDR Gold Shares is a useful indicator. The current price of GLD is $123.42. The trend in the performance of SPDR Gold Trust (GLD) is reflective of the general trend in gold prices.

At the start of the year, GLD was trading at $110.47 per share, and it has appreciated approximately $13 since. That represents a 11.71% return for the year to date. The performance of gold ETFs is markedly higher than the performance of gold for the year to date. These outsized returns are common with funds and stocks. Gold started 2017 at $1,158.87 and has appreciated approximately $40 per ounce. That translates into a 3.5% gain. For now, the gold bugs are cautiously optimistic. There is just enough geopolitical volatility to keep traders interested.

Mark John