Gold Is Now The Hottest Trade: ETFs To Add More Shine

Gold price skyrocketed near six-year high, topping the key level of $1,400 per ounce for the first time since 2013. Notably, Comex gold has gained almost $90 so far in June. With this, the gold futures market is on track for 6.5% gain in June after 1.6% rise in May. This would represent the best back-to-back monthly gains after the January-February 2017 period when it rose more than 8% in total.

The rally was primarily driven by the Federal Reserve, which has signaled interest rate cuts as soon as next month. Lower rates will continue to weigh on the dollar against the basket of currencies, raising the yellow metal’s attractiveness as it does not pay interest like fixed-income assets.

Additionally, the prospect of easing money policies from other major central banks also boosted the yellow metal. The combination of falling yields, global growth concerns, and geopolitical tensions spurred demand for safe-haven assets, pushing up the price of gold. This is because gold is considered a great store of value and hedge against market turmoil. Gold has also been boosted by rising Middle East tensions after a U.S. drone was shot down by Iran's Revolutionary Guard this week.

Given the bullish backdrop, Citigroup expects the metal to reach $1,500-$1,600 per ounce in the next 12 months and $1,500 by end-2019. Further, the ultra-popular SPDR Gold Trust ETF (GLD - Free Report), with an asset base of around $35.9 billion and an average daily volume of around 7.8 million shares, has pulled in around $886 million in capital so far this month.

In such a positive scenario, the appeal of gold ETFs is increasing. As a result, investors who are bullish on gold right now may want to consider a near-term long on the precious metal. Fortunately, with the advent of ETFs, this is quite easy as there are many options for accomplishing this task. Below, we highlight them and some of the key differences between each:

ProShares Ultra Gold ETF (UGL - Free Report)

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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