The SPDR Gold Shares (NYSEArca: GLD), the world’s largest ETF backed by physical holdings of gold, fell 3.3% and is now off nearly 10% from its January highs. Even with Monday’s modest upside, gold futures have traded lower in seven of the past 11 session.
Improving labor data are fueling Federal Reserve rate hike speculation and dragging on the gold bullion and miner-related exchange traded funds. That much was confirmed by last week’s declines of more than 10% for the Market Vectors Gold Miners ETF (NYSEArca: GDX) and the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ). [Trouble for Gold Miners ETFs]
GDX and GDXJ both plunged last Friday, but those declines prompted some speculative traders to make large bets on those ETFs’ leveraged equivalents, bets that are going terribly wrong Monday.
The Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) and the Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG) are off 9.1% and 10.8%, respectively, at this writing Monday.
Those declines come after traders poured $117.6 million into NUGT and nearly $31.4 million into JNUG last Friday, according to Direxion data. NUGT and JNUG are the triple-leveraged answers to GDX and GDXJ.
Inflows to NUGT and JNUG arrived as the ETFs lost 21.5% and 21.9%, respectively, last Friday, making the pair the two worst-performing bullish leveraged ETFs in Direxion’s stable for the day. Conversely, the Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST), which each gained more than 22% last Friday, saw outflows. Investors pulled over $40 million combined from DUST and JDST last Friday, according to Direxion data. [A Gentler View of Leveraged ETFs]