Gold ETFs Under Pressure But Uptrend Is Stable Say Analysts

Gold futures and ETFs settled higher on Monday after paring gains from a run that approached $2100 an ounce Friday. The metal broke a five-session win streak on Friday, as China instituted fresh sanctions against U.S. officials in what appeared to be pushback for similar regulations against Hong Kong and mainland officials last week.

China claimed it would impose sanctions on 11 U.S. citizens, including Republican Sens. Ted Cruz and Marco Rubio.

“Gold is higher on the China news enhancing new buying after profit-taking last Friday,” wrote Peter Cardillo, chief market economist at Spartan Capital Securities

Front-month December gold added $11.70, or 0.6%, to settle at $2,039.70 an ounce, after the precious metal lost 2% on Friday, slashing into its weekly gain of 2.1%. Gold has had a record run that saw it surge for ver two months, marking its longest winning streak since the period ended May 12, 2006.

Analysts and investors see the fallout from the coronavirus crisis, along with ongoing tensions between the US and China, as a reason to drive up the price of bullion, which has been benefitting ETFs like the SPDR Gold Shares (GLD).

China’s sanctions against the U.S. arrives as tensions between the U.S. and China related to Beijing’s perceived handling of the coronavirus pandemic and national-security laws being enforced in Hong Kong have been mounting quickly, and have included the closures of consulates globally.

Gold’s fall last week was also attributed to a bounce in the U.S. dollar, and a shift higher in government bond yields, which tends to rival interest for safe-haven metals like gold.

Still, analysts are confident that this run in gold should continue for some time, with some analysts like Frank Holmes, a longtime gold bull, even believing that gold investors should be buying on the dips, as the gold market could reach $4000 during this price cycle.

“Technically, the gold bulls have the strong overall near-term technical advantage,” wrote Jim Wyckoff, senior analyst at He said that resistance for gold in the near term may be around $2,100, but that support may be found around $2000.

ETF investors can get gold exposure on a pullback using GLD and other gold ETFs, or via miners ETFs which are rallying modestly Wednesday using the following funds:

  • VanEck Vectors Gold Miners (NYSEArca: GDX): seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE® Arca Gold Miners Index®. The index is a modified market-capitalization weighted index primarily comprised of publicly traded companies involved in the mining for gold and silver.
  • Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG): seeks daily investment results, before fees and expenses, of 200% of the daily performance of the MVIS Global Junior Gold Miners Index. The index includes companies from markets that are freely investable to foreign investors, including “emerging markets,” as that term is defined by the index provider.
  • Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT) : seeks daily investment results, before fees and expenses, of 200% of the daily performance of the NYSE Arca Gold Miners Index. The fund invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, and securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index. The index is comprised of publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in the mining for gold and, in mining for silver.

For more market trends, visit ETF Trends.