The SPDR Gold Trust (GLD) stock price continues firing on all cylinders this year, helped by the ongoing demand for safe havens. GLD, the biggest gold-tracking ETF, surged to a high of $296 on Monday, bringing the year-to-date gains to 22%. It has done better than other assets like stocks and Bitcoin.
Gold as a safe haven asset
The GLD ETF has soared as the gold price has surged to a record high amid the ongoing safe haven demand.
Data shows that the fund has had substantial inflows this year, totalling over $7.8 billion. This makes it on of the top-performing funds in terms of inflows, a trend that may continue as volatility remains.
The need for a safe haven has escalated after Donald Trump started his trade war that led to a big decline in stocks and the US dollar. He launched large ‘reciprocal’ tariffs on all countries, including a base 10% levy.
While he has shown some flexibility, analysts warn that the US and the global economy still face substantial shocks. That’s because he has left a 10% tax on goods from all countries and a 25% levy on popular goods like cars, steel, and aluminium.
Gold has emerged as a top safe haven, beating other popular assets. For example, the US dollar index, which is often seen as a haven, has crashed from the year-to-date high of $110 to the current $99.
Similarly, American bond market has also become so volatile that it has been compared as meme stocks. Some analysts believe that some of the top holders of US bonds will start offloading it as the total public debt surges to over $36.7 trillion.
Federal Reserve to the rescue?
The SPDR Gold ETF has also jumped recently as investors remain optimistic that the Federal Reserve will intervene soon.
Some Fed officials have already signaled that this will happen if the US sinks into a recession or shows substantial weakness.
In a statement on Monday. Fed Governor Christopher Waller hinted that the bank would slash rates at a faster rate if the US slowed. Susan Collins, another Fed official confirmed that in an interview with the FT.
Analysts now expect at least three interest rate cuts this year, higher than the two that the Fed has hinted.
The GLD ETF does well when Fed is slashing interest rates as it did during the Covid-19 pandemic.
GLD ETF stock price analysis
The weekly chart shows that the SPDR Gold ETF has been in a strong surge as we predicted a few months ago. It has moved above the supertrend indicator and all moving average, a sign that it is gaining momentum.
GLD’s oscillators, like the Relative Strength Index (RSI) and the Stochastic, have all surged to the extreme overbought levels lately. The Average Directional Index (ADX) has moved to 47, a sign that the bullish momentum has continued.
Therefore, while the SPDR Gold Trust has a bullish outlook, there is a likelihood that it will have a brief pullback and potentially hit the support at $250. This pullback will happen as some investors start to take profit.
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