Wall Street has been suffering as investors are increasingly worried about rising inflation and interest rates. Notably, the latest data highlighted inflation levels rising at the fastest speed since 2008 in April. Notably, the Consumer Price Index rose 4.2% year over year in comparison with the Dow Jones estimate of a 3.6% rise, per a CNBC article. The Producer Price Index in April expanded 6.2% from the year-ago month, representing its biggest expansion in a decade.
Investors are worried that rising inflation may hurt corporate margins and profits. They also fear that the consistent rise in inflation may put pressure on the Federal Reserve to tighten monetary policy, according to a CNBC article.
Considering the current scenario, gold prices have been rising. The inflationary backdrop in the United States is favorable for gold as the metal is historically viewed as a hedge against inflation. Moreover, rising inflation often lowers the value of the concerned currency. If the greenback remains subdued, gold will gain some glitter back. Going on, the Fed has been acting super-dovish since March 2020. It has decided to maintain rates near zero until 2023, at least.
Some analysts believe the Federal Reserve’s measures to provide support to the ailing economy are supportive of investments in gold and treasuries. Moreover, interest-rate cuts are lowering opportunity costs of investing in non-yielding bullion.
Gold ETFs mostly move in tandem with gold prices. The SPDR Gold Shares GLD, iShares Gold Trust IAU, SPDR Gold MiniShares Trust GLDM and GraniteShares Gold Trust BAR are some of the popular ETFs. These funds carry a Zacks ETF Rank #3 (Hold).
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SPDR-GOLD TRUST (GLD): ETF Research Reports
ISHARS-GOLD TR (IAU): ETF Research Reports
GRNT-GOLD TR (BAR): ETF Research Reports
SPDR-GOLD MINI (GLDM): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
