Despite its role as a traditional safe-haven play during times of uncertainty, the yellow metal has declined about 9% this year on rising U.S. interest rates and a strengthening dollar.
Buying Opportunity in Gold Miners
Nevertheless, some traders are looking at the recent weakness in gold and believe there may be a buying opportunity in gold miners.
Larry McDonald, macro expert and editor of the Bear Traps Report, on CNBC argued that there is a promising risk/reward set-up for gold and gold miners.
McDonald pointed out that gold miner stocks are seeing a high degree of capitulation with investors fleeing the market after an asset has posted meaningful declines. The short interest in the gold miner space has reached its highest level in five years. The Federal Reserve is widely expected to maintain a hawkish perspective. However, the Fed and the global economy may now get knocked onto a softer tightening path, which could create an attractive risk/reward into year-end.
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