Gold could see a resurgence in the second half, said one market analyst.
The metal has had a rough go of it in 2021, down nearly 5% year to date as investors rotate out of the safe haven trade into riskier assets. Gold prices hit a one-week low on Wednesday, though they’re up almost 2% in July.
The rotation also hit exchange-traded funds, with SPDR Gold Shares (GLD), the largest ETF in the world backed by physical gold, seeing $7 billion in redemptions so far this year, ETF Trends CEO Tom Lydon told CNBC on Monday.
The redemption process helps keep an ETF’s trading price in line with its underlying net asset value when it is trading at a discount to its NAV.
But rising inflation could be setting gold up for a rebound, Lydon said in an interview on “ETF Edge.”
“Historically, when you look at inflationary times, gold tends to be a second-half player,” said Lydon, also CEO of ETF Database.
Over the past 12 months especially, gold prices have been flat to lower — down more than 2% as of Wednesday — while base metal, food and energy prices have rallied, he said.
“If we actually do see inflation tick up here, you can expect that gold will kick in and with that, it’ll be better for these companies as well,” Lydon said.