With progress in U.S.-China trade talks, safe-haven assets seem to have taken a back seat. However, the full effect of the tariffs may be delayed, keeping market volatility intact.
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The hedge fund billionaires listed below sold shares of Nvidia (NVDA 0.12%) during the fourth quarter, ahead of the recent stock market crash. They also purchased SPDR Gold Shares (GLD -0.97%), an exchange-traded fund that soared 166% in the last decade.
Wall Street's recent revival dulled gold's shine on cues of trade de-escalation. However, since volatility persists, it is better to play equities with a defensive approach.
After its best quarter since 1986, gold sits in overbought territory. Further upside looks unlikely.
The allure of gold's recent out performance is undeniable but the current technical indicators suggest that investors should not chase the shiny metal at these extended levels.
In the ever-changing world of investing, market volatility is one of the few constants. These good quality ETFs should help you weather market uncertainty if held for the long term.
Goldman Sachs has raised its year-end price forecast for safe-haven gold to $3700 per ounce, per Reuters.
In times of market volatility, such as the current U.S.-China trade war, gold serves as a reliable hedge, making SPDR Gold Shares ETF a strong portfolio addition. Historical data shows gold outperformed SPY during the 2018-2019 trade war, suggesting a repeat is possible with renewed trade tensions. Options market analysis indicates bullish momentum for GLD, with significant gamma exposure targeting $310-$330, supported by institutional buying in dark pools.
Strong inflows into the ETF market, record quarter, still show strong interest, despite gold trading at all-time highs. GLD continues to be driven by three key factors: a weakening dollar, falling rate expectations, and volatility indices at peak levels. Historically, the three major dollar drawdowns have proven to be positive for gold prices.
Recent changes in geopolitics have increased the probability of a recession. This leads me to see a better return/risk ratio for GLD than SLV. I expect GLD to demonstrate better resilience in market downturns both in terms of lower drawdowns and quicker recovery time.
As gold has been on an unstoppable rally, investors have a long list of ETF options to tap the metal's ascent.