By Sanghamitra Saha
Tensions may have started piling up in the gold ETF investing space on Fed hike talks and the likely strength of the greenback, but investors possibly should not be bogged down. The yellow metal had an astounding rally this year on a flight to safety amid global growth issues and a major event like Brexit at June end. In fact, gold price saw the best the first half (+25%) in over 35 years.
Even after the sell-off in late August triggered by Fed rate hike speculation, the largest gold bullion ETF SPDR Gold Shares ETF (GLD - Free Report) is up over 24% so far this year (as of September 1, 2016). At present, the metal is loitering below the $1,330 level, but could spring back to lofty levels again in the coming days.
Below we profile a few reasons which explain why gold has more room to run:
Downbeat U.S. Economic Data Points
Investors should note that the recently released key U.S. economic indicatorsare not too strong to lead the Fed to a sooner-than-expected rate hike. The “second estimate” of Q2 GDP came in at 1.1%, lower than the prior estimate of 1.2%. The ISM manufacturing number for the month of August suddenly came in weaker. As per the reading, U.S. manufacturing shrank last month for the first time since February, as new orders and output declined and factories shed jobs.