Gold Rebound Fuels Upturn in Mining Stock ETFs
August 8th 2013 at 5:51pm by Tom Lydon
Embattled gold miner ETFs continue to try to dig themselves out of a deep hole. The funds rallied Thursday as gold snapped a six-session losing streak, ending the metal’s longest downswing in 11 weeks.
Gold futures were 2.0% higher Thursday, trading around $1,311 per ounce. Meanwhile, the SPDR Gold Shares (NYSEArca: GLD) was up 2.2%.
Gold prices strengthened on a surprise rebound in China’s exports and imports, which boosted the economic outlook and lifted bullion’s appeal as an inflationary hedge, Reuters reports.
“It looks like things in China are moving into the right direction, so that means deflationary forces are brushed aside and inflationary forces are more popular now,” said Axel Merk, portfolio manager of Merk Funds, said in the article.
Additionally, the U.S. dollar hit a seven-week low, bolstering gold prices – gold is denominated in USD and becomes cheaper for foreign investors when the dollar depreciates.
The boost in the yellow metal fueled the surge in gold miners and producers, which were among the top percentage gainers in the S&P Thursday.
Market Vectors Gold Miners ETF
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.
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