The spot price of gold broke a key resistance level as it surged above the $1,350 U.S. mark on June 19. The U.S. Federal Reserve held rates steady at its key meeting but left the door wide open for a rate cut in 2019. This announcement sent the yellow metal past a two-year high. So, does this rally have the legs for a full-fledged bull run?
A lot is riding on the second half of the year for gold. If the Fed moves early on a rate cut, we could be looking at a strong finish to the year. Now is a tempting time to get into gold, especially as prices for other equities remain at high levels.
The iShares S&P/TSX Global Gold ETF (TSX:XGD) offers investors broad exposure to global gold equities. Shares were up 3.53% in late afternoon trading on June 20. The ETF is now up 15% month-over-month and 12% in the year-to-date period.
This comes after a 4% drop in 2018 and a flat year in 2017.
Its top holdings should not surprise investors. Newmont Goldcorp, Barrick Gold, and Franco Nevada round out the top three holdings. The three gold producing giants make up nearly 50% of the ETF.
There has been a scramble for acquisitions in the gold sector as smaller producers have struggled to stay afloat due to anemic price growth. If gold can build momentum into the next decade large producers will see earnings surge in the coming quarters.
