Gold futures improved Thursday over global economic concerns, moving up about 1.7% to $1,232 an ounce. It is up about 20% so far this year.
Last week, the precious metal hit a 52-week high of $1,260 per ounce. And DoubleLine Capital CEO Jeffrey Gundlach continues to predict that it may hit $1,400.
While some market players are asking if the precious metal’s price has peaked, many analysts say investors should expect further price movement as the metal most likely goes higher.
“Investors have been flocking to gold as a safe haven from unsettled markets, but as we have seen in recent days, gold can carry some volatility of its own,” said Dan Denbow, a senior portfolio manager of equity investments for USAA Asset Management, in a report issued Wednesday.
Furthermore, analysts stress that the metal has value beyond its pricetag.
David Mazza, the head of research for SPDR ETFs and SSGA Funds, says that so far this year, concerns over the state of the global economy and corporate profits have prompted investors to turn to gold for both portfolio diversification and risk mitigation.
“Turbulent and choppy markets, such as the ones we are witnessing today, present investors with an opportunity to reevaluate the strategic role gold may play in a portfolio,” Mazza explained in a report on Tuesday. “While it may be used tactically during times of elevated inflation or persistent dollar weakness, as we saw after the Federal Reserve’s first quantitative easing program, the role of paramount importance for gold is as a strategic diversifier within portfolios.”
The metal dipped under $1,200 on Wednesday morning, marking a 5% drop over the prior few days, Denbow adds. Still, he argues, with market uncertainty “still running high … it’s too early to say that gold’s time has come and gone.”
On Thursday, the SPDR Gold ETF (GLD), for instance, was up 1.5% to $17; it is up about 15.5% year to date. Meanwhile, the Market Vectors Gold Miners ETF (GDX) improved 5% to $18.7 on Thursday and has jumped 35% so far in 2016. As for mutual funds, the Fidelity Select Gold Portfolio (FGDAX) is up 25% in 2016, while the US Global Gold & Precious Metals Fund (USERX) has risen 26%.