Trump's Possible Iran Deal Is Putting Gold ETFs Back In Focus As Bullion Prices Climb

Gold prices advanced on Monday morning, as a potential U.S.-Iran peace deal has dampened inflation fears and weakened the U.S. dollar. Spot gold prices gained 1.2% to around $4,560 per ounce at 4:09 a.m. ET.

Higher bullion prices could boost gold-backed ETFs, such as SPDR Gold Shares (NYSE:GLD), iShares Gold Trust (NYSE:IAU), SPDR Gold Minishares Trust (NYSE:GLDM) and abrdn Physical Gold Shares ETF (NYSE:SGOL), which offer exposure to gold without physically owning it. All these funds have gained more than 5% since the start of the year.

Deal Hopes

President Donald Trump on Saturday said that the United States, Iran and several Middle Eastern nations are nearing a peace agreement that could reopen the Strait of Hormuz, a critical global oil shipping route, after about three months of closure. The hopes pushed oil prices lower, easing concerns about inflationary pressure on the global economy.

WTI Crude (July) dropped 4.4% to $92.34 per barrel at 4:25 a.m. ET.

The ICE U.S. Dollar Index moved lower by 0.2% at 4:14. a.m. ET. This drop can make gold cheaper for buyers using other currencies.

Rate Hike Bets Limits Gains

While easing inflationary pressure would benefit gold, the fear of persistently high interest rates is limiting demand for the metal.

Inflation fears have compelled policymakers to consider a rate hike rather than cuts, according to the minutes from the April 28-29 meeting. A majority of officials indicated support for policy tightening if inflation continues running persistently above 2%.

A Quick Look At ETFs

SPDR Gold Shares

• GLD is the first U.S.-listed ETF backed by a physical asset. It has $149.5 billion in assets under management (AUM) and charges 0.40% in annual fees. The fund trades in an average daily volume of about 6 million shares.

iShares Gold Trust

• With AUM of $69 billion, this ETF charges 0.25% in annual fees and trades with an average daily volume of 5 million shares.

SPDR Gold Minishares Trust

• GLDM has amassed $30.5 billion in AUM and trades with a volume of more than 3 million shares a day on average. It charges a lower annual fee of 0.10% from investors.

abrdn Physical Gold Shares ETF

• SGOL has an AUM of $7.6 billion and trades with an average daily volume of about 2.3 million shares. It has an expense ratio of 0.17%.

Benzinga Edge Stock Rankings indicate that all four ETFs have a Momentum score in the 59th percentile. It maintains a weak price trend in the short and medium term, while maintaining a strong trend in the long term. Here is GLD’s rankings.

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