Gold (IAU) : The trend is still wavering

iShares Gold Trust - IAU - 13/07/2017

Short term strategy : Negative (10%) / trend -
Long term strategy : Positive (70%) / trend =

Characteristics of the ETF

The ETF IAU Gold trust allows investors to access a daily exposure to fluctuations in the price of Gold bullion, and represents an easy way for investing into physical Gold through a financial instrument both liquid and whose cost of access is limited (0.25% in the lower range of ETFs expenses).

Gold is usually not correlated to equity and bond markets and also serves historically as a safe haven, particularly at times of high inflation and through financial crisis, as we have seen from the recent period (2007-2012) marked by the subprime crisis, followed by the crisis on the European peripheral debts. Furthermore, gold is sensitive to other factors such as central bank purchases which is currently the case with significant inflows of foreign central banks in emerging countries such as China and India.

The momentum in US interest rates is also very important for gold prices because this precious metals do not grant dividend or interests, therefore the FED hike is a central issue for the gold price : if the FED does not accelerate the rate hike pace in the coming months, this should be beneficial for the gold price. However in case of inflationary spiral as in the 70's, the very strong rates is good news for gold as a safe haven.

Gold may also be seen as a diversification to an equity portfolio, because the change of the metal is not correlated to economic cycles and may follow a very different path opposed to the tendency of stock indexes, but not necessarily. Finally gold is denominated in US $, which may have a double effect because the dollar itself is seen as a safe haven and the dollar tends to be positive for commodity prices.

Since the election of Donald Trump, Gold corrected sharply because of higher long rates which makes it less attractive, while inflation expectations rise without worrying. Talk of embargo/quotas on india imports also weighted on prices at the end of 2016, while India is the biggest gold consumer especially for jewellery. But for the time being measured actions from the FED on rates and potential threats of trade war between China and the US (even with Germany and Japan), the consequences still underestimated Brexit debt as well as the very important largest economies – the United States, China, Japan, Europe) remain encouraging for gold prices. 

In the event of a slippage in inflation or conversely if a new crisis were to emerge on the horizon, gold would become again the natural safe haven for investors. While the dollar is currently in the upper zone and long rates has entered  an upward trend, gold is performing relatively well (+ 5.7% in 2017 after + 8.6% in 2016). More recently, the theme of reflation of the economy and some signals of policy change from the ECB weighed on gold prices. However, the rate hike process should remain very gradual, as confirmed by the FED.

Monthly data

The monthly charts analysis shows that gold is no longer in bearish trend as it was the case between 2012 and 2015. The bearish trend has given way to a trading range, with the EMA100 as the main support line, and a constantly decreasing volatility.

The oscillators, like the MACD are completely flattened. For now, gold is in a phase of prolonged wavering, and the exit of the range will most certainly be directional.


Weekly data

The weekly chart show oscillations around the EMA 100 and 200 weeks which are flattening. The magnitude of these oscillations is not very significant and they can also be found on the MACD and other oscillators. Overall, the weekly charts confirm the long-term analysis of an absence of trend.

However, two levels are to be monitored : the one that corresponds to the July 2016 peak at around $ 1,380 and the other one corresponding to the July 2015 bottom at $ 1,050.

ETF Objective

IAU, iShares Gold Trust seeks to reflect generally the performance of the price of gold.


Inception date 21/01/2005
Expenses 0,25%
Issuer iShares
Benchmark LBMA Gold Price
code/ticker IAU
CUSIP 464285105
Currency USD ($)
Exchange NYSE/USA
Assets Under Management 8 284 M$
Dividend No
Number of Holdings 0
Risk 3/5

Country Breakdown

Not significant

Sector Breakdown

Gold 100%

Top Ten Holdings

Gold 100%