Treading Carefully With Gold Miners ETFs

The VanEck Vectors Gold Miners ETF (NYSEArca: GDX) and the VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ), the two largest gold miners exchange traded funds, are up 18.5% and 30.7%, respectively, year-to-date.

Those big gains in a small amount of time have some traders arguing that gold miners ETFs are due for a near-term pullback. GDX is comprised of global gold miners, with a notable tilt toward Canadian and U.S. mining companies.

Although many market participants still expect the U.S. central bank to boost borrowing costs multiple times this year, investors are renewing their affinity for gold ETFs early in 2017. In the face of a stronger dollar and speculation that the Federal Reserve could raise interest rates as many as three times this year, gold prices could move modestly higher with some help from emerging markets, namely China and India. However, the dollar has recently retreated in noticeable fashion, helping aid gold’s ascent along the way.

“Current prices are an important level for gold miners. A sustained breakout from the falling bear market channel would be hugely bullish. But we are not there yet, and gold is still in a falling market. We remain bearish with our Gold Miners Forecast for 2017 until proven otherwise,” reports ETF Daily News.