There’s a gold rush taking place on Wall Street.
According to market data, professional traders are flooding into gold exchange-traded funds (ETFs) at a record pace as the price of the precious metal hits an all-time high. Recent data from JPMorgan Chase (JPM) shows that gold ETFs saw record inflows of $4.5 billion in the past week, led by the SPDR Gold Shares ETF (GLD).
The stampede into gold ETFs comes as the geopolitical outlook grows more uncertain, equities continue to decline, and the price of gold bullion trades at close to $3,000 per ounce. Trade uncertainty and increasing worries about inflation are also driving traders into the safety of gold, says JPMorgan.
Growing Uncertainty
Gold is known as a safe haven asset. It tends to thrive during periods of geopolitical and market uncertainty such as now. For many traders and investors the preference is to own an ETF that tracks the spot price movements of gold rather than own the physical metal. State Street Global Advisors GLD ETF is the oldest and largest of the available gold ETFs, with a market capitalization of $81 billion.
So far this year, the GLD ETF is up 10%, mirroring the gain in gold’s price. Year-to-date, gold has dramatically outpaced the benchmark S&P 500 index’s 2% increase. At its current price of $2,930 per ounce, many analysts and traders on Wall Street are bracing for the precious metal to surpass $3,000 an ounce for the very first time.
Is the SPDR Gold Shares ETF a Buy?
The SPDR Gold Shares ETF tracks the price movements of bullion. As noted in the chart below, the ETF has gained 11.80% over the past three months, mirroring the price increase in physical gold.
