Gold ETFs Drop to 4-Month Low, Test Long-Term Support

According to the Fed-funds futures market, options traders are betting on a 63.9% chance of a rate hike in December, compared to just below 60% a day ago.

The gold market may continue to weaken if the Friday’s jobs report reveals improved September payrolls.

“Traders are not eager to buy yet,” George Gero, a managing director at RBC Capital Markets, told the WSJ. “They want to see how the jobs numbers play out. I don’t think the selling is over.”

SEE MORE: Gold ETFs Could See Some More Downside

Meanwhile, bearish traders have been capitalizing the sell-off on inverse or short ETF options. For instance, the VelocityShares 3x Inverse Gold ETN (NYSEArca: DGLD), which tries to reflect the performance of three times the inverse or -300% daily performance, increased 2.8% on Thursday.

Additionally, investors bet against gold miners with bearish options like the Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST), the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST) and ProShares UltraShort Gold Miners (NYSEArca: GDXS). The Direxion options take the -300% exposure to large miners and junior miners, respectively, while the ProShares option take the -200% exposure to large miners and junior miners, respectively. On Tuesday, DUST surged 8.6%, JDST jumped 12.3% and GDXS advanced 5.9%.

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