Gold exchange-traded funds (ETFs) experienced their largest inflows in close to two years last month as investor interest in the precious metal skyrocketed amid record prices. After months of consecutive interest rate hikes pressured gold prices, a confluence of factors has caused gold prices to surge to record levels in recent weeks.
The increasing rate of violent conflicts, specifically the Hamas attack on Israel, caused gold prices to spike as investors desperately sought a safe-haven asset to preserve their holdings from the fallout of a potential conflict in the broader Middle East. Hopes that the U.S. Federal Reserve will finally ease its tight monetary policy next year also resulted in higher gold prices.
The SPDR Gold Shares ETF saw its November inflows climb to more than $1 billion based on expectations that the Fed would start reducing benchmark interest rates as early as March 2024. November represented the Gold ETF’s most robust month of inflows since March 2022, thanks to increasing demand for the yellow metal.
Aniket Ullal, head of ETF data and analytics for CFRA Research, notes that many people are fairly bullish on gold. The precious metal has seen its prices rise and fall several times in the past couple of years thanks to various reasons. High interest rates during the coronavirus pandemic and in the months after forced investors to purchase other assets that earned interest, causing gold prices to drop.
However, a spike in gold purchases by several central banks in 2022 turned into the largest gold-buying spree in history and propelled gold prices to new highs. This purchase spree supported gold prices into 2023 until central banks from nations such as China and India scaled down their purchases.
A variety of geopolitical facts now threatening global economic stability and the hope that the U.S. Fed will cut interest rates have again allowed gold prices to regain their former vitality. Falling U.S. Treasury yields have also been instrumental in raising gold prices as they point to cooling inflation and increase the appeal of gold because it is a nonyield-bearing asset.
A 3.5% fall in the dollar’s value from its year-high in October could also boost dollar-priced commodities such as gold as they become cheaper for foreign buyers as the greenback declines.
The $57.8 billion SPDR Gold Shares ETF ended November 2.5% higher and is close to 11% up this year, putting it behind the U.S. benchmark S&P 500 index, which has gained 20% so far this year.
The surging price of gold could slow down business for the jewelry industry, but entities such as GEMXX Corp. (OTC: GEMZ) that are involved in the entire supply chain from gold extraction to the making of final jewelry products could have an advantage over competitors that source their gold on the open market and use it to make jewelry.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
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