GLD, IAU, and UGL ETFs in focus as gold price surges

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Written on Apr 1, 2024

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Gold price continued its strong momentum this week.
Demand from Chinese investors and central bank is rising.
Gold-focused ETFs like GLD, IAU, and UGL have done well.

The SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and the ProShares Ultra Gold (UGL) ETFs continued their strong rally and inflows as the gold price rally intensified. The first two funds have jumped by more than 7.6% in 2024 while the UGL fund is up by over 13.14%.

Gold vs GLD vs IAU vs UGL ETFs

Gold price rally intensifies

The three ETFs have jumped sharply this year as the price of gold continued roaring back. Gold price soared to a record high of $2,265 on Monday as demand from central banks and investors jumped.

Many central banks have been buying gold in the past few months. China has bought gold for 16 months in a row as tensions with the US rose. The bank is buying gold after the US and other Western countries sanctioned Russia following its invasion of Ukraine in 2023.

Other central banks like those in Zimbabwe, India, Uzbekistan, and Turkey have also been accumulating gold.

Meanwhile, investors in key countries like China have also boosted their gold purchases as their stock market drop. The Hang Seng index, Shanghai, and China A50 have been some of the worst-performing indices this year. As a result, many sophisticated investors have diversified to gold.

Further, gold is surging as demand for alternative assets rise. With stocks soaring, many investors have sought to embrace alternative assets like cryptocurrencies, gold, and private credit.

Most importantly, there are signs that the Federal Reserve will start cutting interest rates in the coming months. A report published last week showed that the headline and core personal consumption expenditures (PCE) index rose slightly in February.

It rose to 2.8% in February, meeting estimates. At the same time, the Federal Reserve has hinted that it will start cutting interest rates later this year. It estimated that it will deliver three rate cuts in 2024.

Gold ETF outflows slow

Data compiled by ETF.com shows that the SPDR Gold Trust ETF added over $525 million in assets in March after shedding over $3 billion in the previous two months.

The iShares Gold Trust, on the other hand, shed over $118 million in assets in March, an improvement from February’s $401 million.

GLD and IAU are the biggest gold ETFs. IAU holds over 12 million ounces while the GLD fund has over 26 million ounces. This explains why the two have tracked the price of gold this year.

The ProShares Ultra Gold ETF added over $10 million in assets in March. This ETF is more unique than the other two in that it employs leverage and seeks to have returns that are twice the daily performance of gold. This explains why it has done much better than GLD and IAU.

Looking forward, there is a likelihood that the gold price will continue rising. Technically speaking, gold has crossed the important psychological level of $2,000, is above all moving averages, while the Average Directional Index (ADX) has jumped to almost 50.

Other oscillators like the Relative Strength Index (RSI) and the MACD also show that gold has momentum. Therefore, the price may continue soaring as buyers target the key resistance at $2,300.