Gold (IAU) : Play the continuation of this trading range?

iShares Gold Trust - IAU - 27/08/2018

Short Term strategy: Negative (10%) / trend +
Long Term strategy: Negative (30%) / trend +

Characteristics of the ETF

The ETF IAU Gold Trust (Ishares) allows the investor to access a daily exposure to gold bullion price changes, and is an easy way to access physical gold through a financial instrument both liquid and whose access cost is limited to 0.25%. Gold is a very volatile asset, and as any commodity does not give rise to a dividend and is a risky asset.

AUM amount to approximately $ 10075 million.

Alternative ETFs: GLD (SPDR in USD), DGL (PowerShares in USD)

Latest developments

Gold rose by 13.1% in 2017, for the second year in a row (+ 8.6% in 2016), after 3 years of sharp decline between 2013 and 2015, which corresponds to the end of the European debt crisis.

Gold, however, is down 7.5% since the beginning of the year, which is mainly due to the sharp rise of the US dollar against other major currencies in recent weeks, while the yellow metal is highly correlated with US dollar.

The turkish crisis and the risk of contagion to other emerging countries has led to a rush to the US dollar, which has caused a drop of about 10% on gold since last April. On the other hand, the Fed's more moderate rhetoric on rate hikes is a rebound factor for the yellow metal.

If the emerging market crisis becomes more acute and threatening to global growth with a fall in the markets, gold would become an interesting alternative.

Index & components

Gold has the particularity of not being correlated with equity and bond markets and has also been used as a safe haven since time immemorial, especially in periods of high inflation and financial crisis, as we saw during the period recent (2007-2012) marked by the subprime crisis, then by the crisis on European peripheral debts.

In addition, gold is sensitive to other factors such as central bank purchases and currently there are significant flows of purchases from central banks of emerging countries such as China and India. The dynamics of US interest rates are also very important for gold prices because this precious metal naturally delivers neither dividends nor coupons, so the rate hike by the FED is a central issue for gold prices. If the FED does not accelerate the pace of rate hikes in the coming months it should be beneficial for gold prices. On the other hand, in the event of an inflationary spiral as in the 1970s, a very sharp rise in interest rates becomes good news for gold as a safe haven.

Gold can also be seen as a diversification alongside a stock portfolio, since the evolution of the precious metal is not correlated with economic cycles and can follow a very different evolution or opposite to the trend of the stock indices, but not necessarily.

Finally gold is denominated in US $, which can have a double effect since on the one hand the dollar is itself considered as a safe haven and the decline of the dollar tends to be favorable to commodities.

Rumors of embargoes / quotas on gold imports in India following a demonetization policy have also weighed on prices since the end of 2016, while India is the largest consumer of gold especially for jewelery. But the FED's currently measured policy on rates and the still significant threats to possible trade conflicts between China and the US (or even with Germany and Japan), the still underestimated consequences of Brexit as well as the very large indebtedness of the largest economies (US, China, Japan, Europe) favor a rebound of the yellow metal.

Monthly data

The monthly chart shows a flat trend that has lasted for about 5 years. After a bullish start missed in 2016 and 2017, gold is now heading to its low range at around $ 1070. Long moving averages are threatening to cross lower while the MACD could soon cross its zero line. The range exit risks are in the downward direction,  but mitigated by the EMA100 which is completely flat and guides rather towards a continuation of the range.


Weekly data

On the weekly chart, we can observe the sharp drop in gold since April in the wake of the rising  US dollar. A bullish reaction is visible through the weekly candlestick which will have to be confirmed. However, this rebound has for the moment only a technical consequence: that of bringing out the RSI of its oversold zone. It's a good start but the road is long before considering a short-term turnaround.

ETF Objective

IAU is an ETF listed in USD, which seeks to replicate prices of Gold.


Inception date 21/01/2005
Expense ratio 0,25%
Issuer iShares
Benchmark LBMA Gold Price
code/ticker IAU
ISIN US4682851053
Currency USD ($)
Exchange NYSE/USA
Assets Under Management 10 075 M$
Dividend No
Number of Holdings 0
Risk 3/5

Country Breakdown

Non significant

Sector Breakdown

Gold 100%

Top Ten Holdings

Gold  100%