Gold miner ETFs recently reached a nine-week high thanks to a recovery after the steep sell-off. Gold producers still show positive technical and fundamental aspects that could provide further support.
Market Vectors Gold Miners ETF (NYSEArca: GDX) is about 20% higher from its May 16 intra-day low. However, GDX was down 3.6% Thursday as spot gold prices dropped 2.8%. [Gold Miner ETF Rebound Draws Bullish Options Trade]
Gold futures dipped below $1,600 per ounce after the Federal Reserve kept quiet on its strategy to aid the U.S. economy, reports Matt Day for the Wall Street Journal. [Central Bank Stimulus Would Rally Gold ETFs]
If the Federal Reserve engaged in further monetary easing, gold and other precious metals would gain on the depreciation in the paper currency.
“I don’t think we’re going to get a lot of clarity on Fed actions here today, so I think gold is reflecting that disappointment,” Frank Lesh, a broker with FuturePath Trading, said in the article.
Over the past two weeks, with the aid of lower oil prices to help cut back costs, the GDX ETF has crossed over its 50-day moving average.
Additionally, the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) has outperformed the SPDR S&P 500 ETF (NYSEArca: SPY) since mid-May, writes Mike Paulenoff for MarketWatch. Paulenoff notes that the relative strength index of the GDXJ-to-SPY ratio show that the miners have made a major low to the SPY, which suggests that miners hold up better during a down market than the overall S&P 500.
Market Vectors Gold Miners ETF
For more information on gold producers, visit our gold miners category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.