Some gold miner stocks may have been impacted by Wednesday’s market disruption reportedly caused by computer-driven algorithmic trading programs.
ETFs tracking gold miner shares were extremely volatile Wednesday on heavy trading volume.
For example, the $8 billion Market Vectors Gold Miners ETF (NYSEArca: GDX) dropped sharply at the open but then rallied back to fractionally negative for the session. GDX was down 4% earlier Wednesday and trading volume was above-average. [Comparing Gold Miner ETFs]
Meanwhile, volume spiked in a leveraged ETF for the sector, Direxion Daily Gold Miners Bull 3x Shares (NYSEArca: NUGT). Trading was about 5 times the daily average for the trailing three months. The leveraged fund was down about 3% in recent trading but pared its earlier loss.
Scott Freeze at Street One Financial said top gold miner ETF holdings Barrick Gold (NYSE: ABX) and Goldcorp (NYSE: GG) were both “crushed” earlier in the session before recovering.
It was unclear whether the see-saw action in the gold miner stocks was related to Wednesday’s reports of market disruptions stemming from algo trading run amok.
Separately, some utilities ETFs briefly spiked Wednesday morning along with their underlying holdings before falling back near the opening price. [Algos Gone Wild: Utilities ETFs ‘Flash Smash’]
The gold miner ETFs could see more action Wednesday afternoon as they are sensitive to Federal Reserve announcements and expectations of further quantitative easing from the central bank. [Gold ETFs Turn Higher on ECB Pledge as Central Banks Meet]
Direxion Daily Gold Miners Bull 3x Shares
