The spot price of gold moved higher on news that the Senate had followed the House in passing U.S. tax reform by a narrow margin. Gold has been pounded since early September on a strengthening U.S. dollar, improving economic growth, and by the rise of cryptocurrencies as a seemingly viable alternative for a speculative hold.
The SPDR Gold Shares ETF (NYSE:GLD) is the largest gold-backed exchange-traded fund in the world. The ETF has climbed 9.7% in 2017. However, the fund has been mostly flat since January 2014.
A research note from Goldman Sachs Group Inc. projected that gold would fall to $1,200 an ounce by the middle of 2018. Much of the developed world, including the U.S. and Canada, have committed to a path of gradual rate tightening that could put downward pressure on precious metals.
As usual, gold has been highly responsive to geopolitical shocks in 2017. Following the firing of FBI director James Comey on May 9, gold jumped from below the $1,230 mark to over $1,300 in less than a month. Tensions on the Korean Peninsula also fuelled gold in the late summer months. The North Korean crisis has seemingly no end in sight, and the political warfare in Washington is ongoing ahead of what should be an intense 2018 midterm season.
Still, gold is little more than a speculative gamble at this stage as it faces a number of significant headwinds in 2018. The SPDR Gold Shares ETF is a solid option for investors who want to hold a varying position in their portfolios.