Uncertainty is looming over equity markets and astute investors looking for the right opportunity will find funds with significant exposure to precious metals a good investment option. These funds offer solid protection against inflation that almost no other reasonably liquid asset can provide. Moreover, precious metals securities came up with an outstanding performance in the first quarter of 2017, topping the broader mutual fund categories.
Gold Glitters as Uncertainty Persists
The equity market, which registered strong gains following upbeat sentiments over President Trump’s pro-growth economic policies, took a beating after the new healthcare bill failed to get through the House of Representatives. Additionally, uncertainty persists over the number of rate hikes that the Fed will make this year. Further, with some of the recent economic data coming in a bit soft, investors are closely watching Friday’s jobs data in order to understand the Fed rate hike pace this year.
Weaker-than-expected economic data also weighed on U.S. dollar, which, along with continued market uncertainty boosted gold prices. Moreover, gold prices increased 0.4% on Tuesday, to reach $1,258.40 an ounce, its best level since Feb 27. Additionally, it also increased 8.6% in the first quarter of this year.
Valuation Concerns a Boon for Gold
Recently on March 27, the Dow and the S&P 500 fell below their 50-Day moving average, clearly indicating that the market is gradually slowing down. This is mainly because when a benchmark index closes near its lower bound or support level of a trading channel, it indicates that demand is clearly falling and the best bet would be safe-haven sector like precious metals.
The SPDR Gold Shares (GLD) increased 6.3% and 9.1% in the last three months and year-to-date (YTD), respectively. According to Morningstar, the precious metal mutual fund category posted YTD and one-year annualized returns of 12% and 22.7%, respectively.
Buy These 5 Precious Metals Mutual Funds
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