By Luzi-Ann Javier
Is the Federal Reserve poised to spoil the gold bulls’ party?
For the manager of the largest exchange-traded fund backed by the metal, not even a surprise increase in U.S. borrowing costs this month would be enough to damp investor appetite for gold.
“We’re still going to be in an environment where rates in the U.S. are still very low,” David Mazza, the head of ETF and mutual-fund research at State Street Global Advisors, which manages SPDR ETFs, said in an interview Friday at Bloomberg headquarters in New York.
Holdings in gold-backed ETFs are heading for a third quarterly gain, the longest streak since 2012, even as the odds of a rate increase in September rise, data compiled by Bloomberg show. Investors have already poured $12.4 billion into SPDR Gold Shares this year, the biggest inflow among more than 7,000 ETFs tracked by Bloomberg.
“There are still opportunities for investors” to own gold, Mazza said. A surprise rate hike may trigger a temporary sell-off, “but not one that’s causing a bear market.”