Gold miners exchange traded funds are looking to position themselves for better things in 2018 after a mostly disappointing 2017.
For example, the VanEck Vectors Gold Miners ETF (NYSEArca: GDX), the largest exchange traded fund dedicated to gold mining stocks, is up just 6% year-to-date while the VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) is sporting a modest gain.
Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield. Interest rates remain low in many developed markets and some emerging markets have been rapidly lowering borrowing costs this year.
“With a rebound underway we should turn our attention to potential upside targets. GDX closed the week at $21.99. It has resistance at $23.00 including its 200-day moving average at $22.83. GDXJ closed at $31.46. It has resistance at $33.00. Its 200-day moving average is at $33.49. In case we are being too conservative, our optimistic upside targets would be GDX $23.50 and GDXJ $33.50,” according to ETF Daily News.
Related: Gold ETFs May Still Have Opportunities to Shine
The dollar has been one of the worst-performing developed market currencies this year, which has been an assist to gold at various points during the year. However, some currency traders believe the dollar can rebound. While that could be seen as a stumbling block to gold, there are ways for investors to prosper with the yellow metal even if the dollar rallies.
“Precious metals and gold stocks especially have begun a rebound that should last at least three or four more weeks. Due to a lack of an extreme ‘long-term’ oversold condition (like in each of the past four December’s) and the presence of nearby overhead resistance, we would not expect sizeable gains,” reports ETF Daily News. “Another reason is strong fundamentals for precious metals (namely declining real interest rates) are not yet in place.”
Popular leveraged gold miners ETFs include the Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG), the triple-leveraged answer to the popular GDXJ. The Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) is JNUG’s large-cap counterpart.
For more information on the gold market, visit our gold category.