Three Hot Ways to Trade Gold with Cooling CPI

by | May 10, 2023 | Markets

Earlier today, the consumer price index (CPI) came in cooler-than-expected.

In fact, year over year, it was up just 4.9%, which was less than expectations for 5%. If we exclude volatile food and energy prices, core CPI was up 5.5% year over year.

Relieving some of the pressure, markets are pushing higher – as are gold prices.

Last checked, gold was up $7.07 to $2,043.45. “Gold is seeing some renewed buying momentum because analysts have said that inflation below 5% would give the Federal Reserve room to pause its aggressive monetary policy tightening,” says Kitco.com.

Even better, Bank of America believes gold could see $2,500 this year partly because of a potential Fed rate hike pause. That being said, investors can always look to popular gold stocks, such as Barrick Gold (GOLD), Newmont (NEM), Royal Gold (RGLD).

However, gold ETFs offer greater diversification, including:

VanEck Vectors Gold Miners ETF (GDX)

One of the best ways to diversify at less cost is with an ETF, such as the VanEck Vectors Gold Miners ETF (GDX). Not only can you gain access to some of the biggest gold stocks in the world, you can do so at less cost. With an expense ratio of 0.51%, the ETF holds positions in Newmont Corp., Barrick Gold, Franco-Nevada, Agnico Eagle Mines, Gold Fields, and Wheaton Precious Metals to name a few.

Sprott Junior Gold Miners ETF (SGDJ)

With an expense ratio of 0.35%, the Sprott Junior Gold Miners ETF (SGDJ) seeks investment results that correspond to the performance of its underlying index, the Solactive Junior Gold Miners Custom Factors Index. The Index aims to track the performance of small-cap gold companies whose stocks are listed on regulated exchanges.

Or, we can even look at a gold ETF such as the SPDR Gold Shares (GLD), which is the largest physically backed gold exchange traded fund (ETF) in the world.