. Get exclusive investment industry news and insights, the week’s top headlines, and what you and your clients need to know. For more from Globe Advisor, visit ourfutures, which have been rallying since last fall, hit a record high of US$2,372.50 an ounce on Monday before retreating to around the US$2358-level.
Economic worries generally drive investment demand for gold, and a recession is still possible by year-end or in 2025, but “political factors are perhaps more important,” he says. Since 2021, investors globally have been reducing their gold holdings in exchange-traded products to buy more gold directly through bullion bars and coins, he notes.
But sentiment may be shifting a bit. There was US$528-million of flows into U.S.-listed gold bullion ETFs in March – a reversal of a trend for the first two months of the year when there was US$4.6-billion in outflows while the price of gold was rising, Mr. Straus says.For investors wanting gold exposure, Mr. Straus suggests a 1- to 5-per-cent weighting in low-fee bullion ETFs within a portfolio, and that the gold position be rebalanced back to its targeted allocation.
Gold equity ETFs are usually more expensive than bullion ETFs, he notes. The bellwether iShares S&P/TSX Global Gold Index ETFPrecious metal equity ETFs may be better for trading because they’re more tied to the business cycle, he says. If there’s a recession, equities are bound to decline and these ETFs would be affected, whereas a gold bullion ETF could continue rising, he says.
Geopolitics is also helping drive gold higher, notably after the U.S. and its allies froze US$300-billion of Russia’s assets outside that country in 2022 as part of sanctions for invading Ukraine, he says.
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