The overriding trend for the Market Vectors Gold Miners ETF (NYSEArca: GDX) this year has been down, but the $7.1 billion ETF could be poised to deliver some near-term upside.
GDX investors could use some good news as the ETF has tumbled about 10% in the past month. And with gold futures struggling to stay above $1,300 an ounce, questions linger about the ability of some GDX constituents to remain profitable if gold prices give up more ground. [Mining ETFs Vulnerable as Gold ETFs Tumble]
Gold prices and productions are fundamental factors. On the technical side of the ledger, at least one analyst sees opportunity with the volatile GDX. In reference to price action see on Wednesday, Tarquin Coe of the Coe Report, said GDX “rallied strongly off its lows earlier this morning. Price support from early August looks to be effective. The relative chart versus the S&P 500 may also be finding a floor from its July/August lows. Potential for an oversold bounce by the miners.”
Coe also noted reversals in Barrick Gold (NYSE: ABX) and AngloGold Ashanti (NYSE: AU) that could prompt some near-term short covering in those names. Those stocks combine for nearly 15% of GDX’s weight. Alone, Barrick is the ETF’s second-largest holding with a weight of 10.5%.