The spot price of gold suffered a minor retreat in the opening weeks of November after posting one of its best months in 2018 in October. Gold equities in North America experienced a jolt of momentum, but, unfortunately for goldbugs, the yellow metal did not establish solid footing.
The high probability of a U.S. Federal Reserve rate hike in December has kept the U.S. dollar strong. In fact, the U.S. dollar index was one of the few solid performers in a brutal October. Frustrated gold investors may have resigned themselves to poor performance as this rate tightening cycle continued.
However, there are significant economic headwinds on the horizon that could motivate a change of course from the U.S. Fed and from central banks across the developed world.
Because of this, investors may want to consider the iShares S&P/TSX Global Gold ETF (TSX:XGD) as a viable hold heading into 2019. The ETF has plunged 16% in 2018 so far compared to a relatively flat 2017.
A year before that the ETF reeled off a 50% gain in 2016, which was a strong year for precious metals.
The International Monetary Fund and World Bank have projected slower growth across the developed world in 2019.
U.S. tax reform has provided a short-term jolt to the economy, but this is expected to dissipate in the coming quarters. Slower growth combined with some weaker fundamentals in other areas, like wages, will motivate central banks to re-evaluate policy.
A pause on interest rate hikes would be bullish for gold, so this ETF is worth a stash in your portfolio especially as gold remains at a low price.
