Gold miner exchange traded funds surged Thursday as precious metals prices climbed for the fourth session in a row on a weakening U.S. dollar.
On Thursday, the VanEck Vectors Gold Miners ETF (NYSEArca: GDX) rose 6.5% and the VanEck Vectors Gold Junior Miners ETF (NYSEArca: GDXJ) gained 7.6% as the SPDR Gold Shares (NYSEArca: GLD) added 1.3%, with Comex gold futures up 1.5% to $1,157.7 per ounce.
Meanwhile, more aggressive traders capitalized on the Thursday rally with leveraged options, such as the triple leveraged Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT), which surged 18.0%, and the triple leveraged junior gold miners Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG), which jumped 22.5%.
ETF traders who are uncomfortable with the riskier 3x products can also track the miner space with a smaller 2x leverage. For example, the ProShares Ultra Gold Miners (NYSEArca: GDXX) and ProShares Ultra Junior Miners (NYSEArca: GDJJ) take the 2x or 200% daily performance of NYSE Arca Gold Miners Index and Market Vectors Global Junior Gold Miners Index, respectively. On Thursday, GDXX increased 12.8% and GDJJ advanced 16.0%.
Gold-related asset strengthened as the U.S. dollar weakened Thursday – the U.S. dollar index, which tracks the greenback against a basket of major foreign currencies, dipped 0.6% to 102.65. A weakening USD is typically bullish for gold, making it cheaper for foreign buyers.
Moreover, several European elections, including in France and Germany, could favor populist parties and fuel political risk, which some market observers believe could be bullish for the precious metals space, reports Katherine Dunn for the Wall Street Journal.
Also providing further momentum for the precious metals miners space, President-elect Donald Trump tapped Mick Mulvaney, an active gold and gold miner investor, for budget chief, reports Noah Buhayer for Bloomberg.
Mulvaney may have had “an ideological view of what the central banks were doing and, along with many investors, sought out the safety of gold,” Quincy Krosby, a market strategist at Prudential Financial Inc., told Bloomberg. “He wasn’t alone.”
For more information on the gold market, visit our gold category.