Gold To Hit $2000 Soon? ETFs To Bet On

Gold had a sizzling 2020, thanks to the flare-up in equity market volatility and the resultant safe-haven rally. The volatility ETN iPath Series B S&P 500 VIX Short-Term Futures ETN the longest-ever run , according to data compiled by Bloomberg.

Gold’s Near-Term Price Target (NYSE:TGT)

Citigroup (NYSE:C) analyst $1,850 if the virus threat lingers.

Let’s take a look at why gold could rule in 2020?

Coronavirus Outbreak & Return of Global Growth Worries

Trade war worries may have had subsided at the start of 2020 but fears of a global economic slowdown have returned, thanks mainly to the coronavirus outbreak. The International Monetary Fund (IMF) recently said that the virus will likely dent global growth by 0.1% and drag down China’s economic growth to 5.6%, which is 0.4% lower than IMF’s January outlook .

IMF had lowered the global growth forecast in January too. The organization warned that further severity of the virus contagion may worsen the global growth picture (read: Play These Dividend Growth ETFs to Combat Coronavirus ).

Global Policy Easing, Negative Yielding Debt

Most developed (including the United States) and emerging economies have been on a policy easing mode.An easy monetary policy has been adopted by central banks of countries that form about 90% of developed market sovereign debt is trading with negative real rates.

The ECB and the BoJ have benchmark interest rates in the negative territory. The 10-year U.S. yield is near the low end of its five-year range and is “twice in the second half of this year as virus fears loom large.

The latest rally in gold came despite an uptick in the U.S. dollar. The dollar index nearly hit 100 for the first time since March of 2017 . A safe-haven rally, higher demand for bonds and the resultant decline in yields actually benefiting non-interest-bearing asset gold.

2020 an Election Year

Investors should note that 2020 is a U.S. election year, which is likely to induce volatility in the market. Gold normally rises 8.99% in an election year . In the previous election year as well, GLD had gained about 8%.

Inflation Doesn’t Hurt Gold

Though still-muted, U.S. inflation has been on an uptrend of late. Annual inflation rate in the United States jumped to 2.5% in January 2020 from 2.3% last December and beat market forecast of 2.4%. This marked the highest rate since October 2018, mainly boosted by a 12.8% rise in gasoline costs. But then, gold is viewed as an inflation-protected asset. So, if inflation picks up at any point of time, there is no threat to gold.

How to Tap Gold Strength With ETFs?

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There are leveraged gold ETFs like VelocityShares 3x Long Gold ETN (TSXV:GLD) , ProShares Ultra Gold UGL and DB Gold Double Long ETN (BS:DGP) .

As far as regular ETFs are concerned, investors can play products like GLD, iShares Gold Trust all Precious Metals ETFs here).

Investors can also play gold mining ETFs like VanEck Vectors Gold Miners ETF (NYSE:GDX) (TSXV:GDX) . Miner stocks scaled a five-and-a-half month-high on Feb 21. The fund has gained 6.9% in the past month.

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