After tumbling 9% during the third quarter, the outlook for physically-backed gold exchange traded funds such as the SPDR Gold Shares (NYSEArca: GLD) and the iShares Gold Trust (NYSEArca: IAU) is growing darker.

Since mid-March, gold has slid 13%, easily beating the 10% decline need to fit the definition of a correction and with the U.S. dollar in rally mode, traders see more pain ahead for bullion and the related ETFs.

“Put contracts betting on losses in the shares (of GLD) cost 3.9 points more than call options wagering on a rise. The spread, known as skew, increased to 4.4 points on Oct. 3, the widest since Dec. 24,” report Callie Bost and Eric Lam for Bloomberg.

Additionally, hedge funds and other professional speculators elevated net short positions in gold to a record high for the week ended Sept. 30, according to Bloomberg. Gold futures, GLD and rival gold ETFs have been punished by an unprecedented run in the U.S. dollar, one fueled by speculation that the Federal Reserve is planning to raise interest rates early next year. The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) and the WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEArca: USDU) rose an average of 7% in the third quarter. [Dollar’s Rise Powers This ETF]

Investors have not been shy about pulling cash from gold ETFs. “Meanwhile, total known holdings amongst ETF families fell to the lowest level since September 2009 in another sign that the strengthening dollar and fading memory of the financial crisis is stripping gold of its appeal at a hasty clip,” said Interactive Brokers’ Andrew Wilkinson in a note posted by Teresa Rivas of Barron’s last week. [Gold ETF Holdings are Dwindling]

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