Trade Radar | Is It Time to Buy or Sell Gold?
Another Weekly Session with Loui, M+ Online Head of Research.
Decoupling of the “Total Known ETF Holdings of Gold” vs. Gold prices. Following the speech by Jerome Powell during the Jackson Hole Symposium last week, where his tone remained hawkish and the interest rate may head higher or stay elevated for a longer term, the gold price has turned sideways. Also, the Total Known ETF Holdings of Gold has declined for the third consecutive months, which means the redemption within the gold ETF has been quite heavy.
Defended the critical level of USD1,900. However, short term wise, the gold price has been able to defend the critical level of USD1,900 and the investors could be trading it cautiously ahead of the important economic data as that may shaped the Fed’s monetary policies direction going forward.
Fed Fund rate vs. Gold price. On a broader overview, the higher the Fed Fund rate, it may provide strength for the dollar index. Based on the historical data, the price of gold is generally inversely related to the value of the U.S. dollar because the metal is dollar-denominated. Hence, should the Fed Fund rate continues to head higher, that may soften the demand for gold.
So, are you bullish or bearish on GOLD?
We have the following ETFs that are related to the gold market, start trading via our M+ Global App!
| ETFs | Name | Last Price | 1-month return (%) | 5-day return (%) |
| NUGT | $Daily Gold Miners Bull 2x Shares NUGT$ | 31.53 |
-11.85 |
9.4 |
| DUST | $Daily Gold Miners Bear 2x Shares DUST$ | 12.81 |
11.78 |
-8.9 |
| JNUG | $Direxion Daily Junior Gold Miners Index Bull 2X Shares JNUG$ | 31.64 |
-6.78 |
11 |
| JDST | $Daily Junior Gold Miners Index Bear 2x Shares JDST$ | 6.84 |
3.95 |
-10.9 |
| GLD | $SPDR Gold GLD$ | 178.13 |
-2.05 |
1.3 |
| GLDM | $WORLD GOLD TRUST GLDM$ | 38.09 |
-2.03 |
1.4 |
Source: Bloomberg
To add on, leveraged funds are designed to amplify fluctuations in the underlying asset they track, but they are also susceptible to "leveraged ETF decay". This means that even investors with a high-risk tolerance should be cautious and aware of the potential risks associated with these funds.
More about Loui:
Loui Low leads a team of analysts to perform equity and economic research and to provide investment advisory services to the organization's sales team, fund manager and retail fraternity. He has more than 10 years of experience in the stockbroking industry.
He graduated with a Bachelor of Science in Statistics from University of Malaya. He also holds an STA Diploma and is a member of the Society of Technical Analysts (MSTA) United Kingdom.
More about the Trade Radar:
Trade Radar is a weekly-updated section, featuring Loui's latest insights into market trends and hot topics. Traders may find some trading inspiration from Loui's views.
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