Traders always invest in gold when market uncertainty rises. But what happens when gold is tracking inflows — as markets still point to strength?
Gold ETFs have recently continued to trend higher, with SPDR Gold Shares continuing past a pivot zone after breaking out from a flat base on Aug. 29. The movement tracked a rise in gold prices to record highs, which peaked in September.
Traditional market benchmarks like the Nasdaq 100 and Invesco QQQ Trust, meanwhile, have recently pulled back from highs as fears of rotation continue coursing through the market.
Jack Kosar, vice president of investment strategy at Asbury Research, says tracking how markets invest in gold can help gauge investor anxiety.
"I think there's too much apprehension in the market," Kosar told Investor's Business Daily's "Investing with IBD" podcast. "There's too much confusion and people are a little bit concerned."
He cites geopolitical fears and uncertainty around tariffs as major drivers, even if markets have already priced in some of those risks. "A flight to gold, it sounds like safety to me."
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Investors Invest In Gold, Risk To 'Ride The Fence'
Gold is being used as a hedge at the same time as inflows into big cap tech investments by investors who want to "have their cake and eat it too," Kosar said.
Kosar says his Asbury Research Strategic Opportunity Radar Tracker (SORT) report indicates investors are on the fence about markets, with investments into riskier classes like technology alongside safer, value-driven buys like investing in gold. The SORT report considers ETFs that closely follow their respective asset classes.
Asset classes showing a combination of positive trends, relative performance and positive money flows include gold, emerging markets, technology and small caps. Kosar says this indicates investors are "riding the fence" between riskier investments and value.
Kosar says the dual nature of investing in gold and risk shows apprehension. "I'm not calling for a 'top' year by any stretch of the imagination, but I think geopolitically, things going on with tariffs, things going on around the world are making people concerned."
"Whether it's the right investment or not, gold feels like safety sometimes," he said. "People are worried. All bull markets have to end at some point, right?"
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