The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) and other gold-related exchange traded products got a bit of a reprieve last week when the Federal Reserve again opted against raising interest rates.
Still, the Fed appeared more dividend than ever with at least three members voicing the opinion that it is time to boost borrowing costs. However, it must be noted that the Fed did not give a specific timeframe for when it could raise rates again. As investors have already learned this year with gold and gold miners, the longer rates stay low, the better for gold-related assets.
Continue Reading Below
SEE MORE: 31 Gold ETFs Investors Should Size Up
Fed funds futures imply rising probability the central bank will raise rates in December, leading some market observers to say that, at most, there will be just one rate hike this year. Even that happens, some bond traders believe the Fed will not raise rates again until late 2017.
Regarding GLD, “you can see that it is trying to recapture the trendline off the lows since early this year. The gold market may be the true read here as it failed to break down despite a run higher in interest rates recently. If the trendline off the recent highs at 128.50 is taken out, we could very well see new highs for GLD and gold prices,” according to See It Market.
The iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR) have recently seen some profit-taking, but those ETFs could also be ready to resume the uptrend established earlier this year.
Additionally, with the dovish Fed stance, the U.S. dollar weakened, which made USD-denominated silver cheaper for foreign buyers and a better store of value for U.S. investors.
“Silver looks a bit more interesting than gold at this point. I think a break out this triangle would be pretty bullish and open the door for new recovery highs. During the pullback, there was a nice reset of daily momentum. Both the 14-day RSI and MACD had moved into extreme overbought territory following the parabolic move in June and July,” adds See It Market.
For more information on the gold market, visit our gold category.
SPDR Gold Shares
Tom Lydon’s clients own shares of GLD.
This article was provided by our partners at ETFTrends.