Despite a bounce in the mining sector, exchange traded fund investors turned bearish on gold producers after the Federal Reserve’s hawkish stance, piling into a leveraged inverse option Thursday.

The Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST), which takes the -3x or -300% daily performance of the NYSE Arca Gold Miners Index, decreased 3.5% Thursday but its volume surged to 28.7 million mid-day, compared to an average of 2.6 million, mirroring similar volumes on Wednesday when DUST jumped 23.0% in response to the Fed minutes.

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The sudden spike in trading volume suggests that ETF traders are increasing their hedge or betting on further weakness in gold bullion and the mining sector as the Fed looks toward interest rate normalization.

Minutes from the Federal Reserve’s April meeting showed that the central bank was readying for an interest rate hike in June if economic conditions do not deteriorate.

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A rising rate environment will weigh on the precious metal. Since the hard asset does not pay interest rates, investors will turn to conservative debt securities like Treasuries for yield generation and as a safe store of wealth. Additionally, if the Fed hikes rates, the U.S. dollar could continue to appreciate, which will weigh on US-denominated commodities like gold and make it more expensive for foreign buyers.

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