Metals and mining stocks, along with sector-related exchange traded funds, rallied Wednesday on the depreciating U.S. dollar and speculation that the Federal Reserve would not be able to further tighten rates on a weakening economy
The SPDR Gold Shares (NYSEArca: GLD), the world’s largest gold-backed exchange traded product, rose 1.0% Wednesday and broke back above its long-term, 200-day simple moving average after climbing 6.5% year-to-date.
The Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest and most heavily traded gold miners ETF, also rose 5.8% Wednesday while the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ), which tracks smaller gold miners, gained 4.6%.
Additionally, leveraged long gold miner funds were among the best performing ETFs. The Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) and Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG) take the 3x or 300% daily performance of a group of large gold miners and junior miners, respectively. The more recently launched ProShares Ultra Gold Miners (NYSEArca: GDXX) and ProShares Ultra Junior Miners (NYSEArca: GDJJ) take the 2x or 200% daily performance of large miners and junior miners, respectively. On Wednesday, NUGT surged 16.5%, JNUG jumped 13.2%, GDXX increased 10.2% and GDJJ advanced 7.9%.
Meanwhile, the broader SPDR Metals & Mining ETF (NYSEArca: XME) gained 5.4% Wednesday. XME includes a 9.5% in gold producers, 9.4% diversified metals & mining, 8.4% silver and 3.9% precious metals & minerals.
The rally in the miners space also helped the broader materials sector outperform other S&P 500 sectors Wednesday, with the Materials Select Sector SPDR (NYSEArca: XLB) up 1.8%, Vanguard Materials ETF (NYSEArca: VAW) up 1.3% and iShares U.S. Basic Materials ETF (NYSEArca: IYM) up 1.9%.
Precious metals and related mining stocks were outperforming Wednesday due to the weakening USD. The Dollar Index, which follows a basket of developed market currencies, declined 1.5% to 97.43 on Wednesday.