4 Commodity ETFs To Tap At New Highs

Broad commodities have bounced back sharply after a weak fourth quarter thanks to Fed’s cautious stance, which has kept U.S. dollar under pressure. A weak dollar made dollar-denominated assets attractive for foreign investors, raising the appeal for commodities.

Additionally, signs of progress in U.S.-China trade talks, as well as stimulus inthe Chinese economy, lent strong support amid global growth slowdown worries. Further, demand/supply fundamentals are improving for most of the commodities, leading them higher.

In particular, oil had a strong run-up in its prices led by fresh OPEC output cut, falling OPEC production and U.S. sanctions against Venezuela. In the precious metal space, palladium and gold have been shining. Palladium is enjoying its longest bull run in its history prompted by a global shift from diesel to gasoline and hybrid vehicles that has led to higher demand for the metal and resulted in the speculation of a supply deficit. Gold is on a tear due to investors’ flight to safe havens amid still unresolved trade tensions, Brexit concerns as well as political infighting in the United States and Europe.

Industrial metals like nickel and copper are also on the rise given hopes of a trade deal that will ease slowdown concerns in the world’s second biggest economy and will boost demand. Notably, China is the top consumer of raw materials. Agricultural commodities are also staging a recovery. Coming to soft commodities, sugar has been leading the way higher with the global market swinging into deficit in the 2019-20 season. Additionally, reports of a drop in sugar output in India added to the strength.

Given this, we have highlighted a few commodity ETFs that hit new highs in the recent trading session and will continue to trend higher given the same trends persist.

Aberdeen Standard Physical Precious Metals Basket Shares ETF (GLTR - Free Report) – 52-Week Price: $66.58

This fund seeks to reflect the performance of the price of all the precious metal in a physically backed form. Gold takes the top spot at 57.7%, followed by 25.2% in silver, 12.6% in palladium and the rest in platinum. The product has amassed $368.2 million in its asset base while trading in moderate volume of about 34,000 shares per day. It charges 60 bps in annual fees and added 5.4% so far this year. GLTR has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

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