MW One gold ETF rises sharply after longest winning streak since 2020 amid tariff concerns

By Christine Idzelis

'We continue to see gold as an effective portfolio hedge and diversifier,' says UBS Global Wealth Management

Gold was shining bright Monday morning, as investors monitored the tariff front for expected developments this week.

The SPDR Gold Shares GLD, an exchange-traded fund that buys physical gold, was rising a sharp 1.7% on Monday morning, according to FactSet data, at last check. That's after rising six straight weeks, its longest winning streak since 2020, FactSet data show.

"Gold bars are bought as a hedge" against tariff-related downside risks to stocks and U.S. and global growth, commodity analysts at Citigroup said in a research note on Friday after the U.S. stock market's close. "In precious metals, we see gold moving higher very near term" to $3,000 per ounce, they wrote.

On Friday, President Trump said he was planning to announce "reciprocal" tariffs, and then over the weekend, indicated that tariffs on steel and aluminum imports are also coming.

The U.S. stock market fell on Friday as investors worried about the potential for tariffs to place a drag on the economy and increase prices for consumers at the same time that the Federal Reserve keeps up its effort to bring inflation down to its 2% target.

"We continue to see gold as an effective portfolio hedge and diversifier, and believe an allocation of around 5%" within a balanced, U.S. dollar portfolio is "optimal," Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in a note Monday.

Read: Why central banks' hunger for gold shows 'no sign of being quelled' this year

While Marcelli warned in the note that "highly aggressive U.S. tariffs would almost certainly trigger retaliation by U.S. trading partners, and there are risks of a tit-for-tat ratcheting up of measures," she said that UBS Global Wealth Management's "base case is a scenario of 'selective tariffs,' which have the potential to dent, but not derail, US economic growth"

She expects the S&P 500 SPX to rise to 6,600 by the end of the year, but said "the journey up is likely to be accompanied by heightened volatility." The S&P 500 fell Friday to 6,025.99, with all three major U.S. stock indexes booking weekly losses.

Stocks were rebounding Monday, with the Dow Jones Industrial Average DJIA up 0.2%, the S&P 500 gaining 0.6% and the technology-heavy Nasdaq Composite COMP advancing a sharp 1.2%, according to FactSet data, at last check.

The SPDR S&P Metals & Mining ETF XME, which provides exposure to that segment of the market in the U.S. stock market, was surging more than 3% Monday morning.

Gold (GC00) is beating the U.S. stock and bond markets so far this year.

As of Monday morning, the SPDR Gold Shares ETF has surged 10.8% year to date, widely outperforming the S&P 500's 3.1% gain so far in 2025, according to FactSet data, at last check. The iShares Core U.S. Aggregate Bond ETF AGG was up slightly more than 1% this year on a total return basis on Monday morning.

In the bond market, the yield on the 10-year Treasury note BX:TMUBMUSD10Y was trading slightly lower Monday morning at around 4.47%, after rising on Friday as traders braced for new tariffs while assessing a University of Michigan survey that showed a jump in consumers' inflation expectations over the next year.

-Christine Idzelis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 10, 2025 11:39 ET (16:39 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.