Gold futures and ETFs are popping on Monday, after investors are swooping in to buy at perceived bargains following significant losses last week.
Gold futures and ETFs have been trending down since the beginning of the year, and the lustrous metal most recently dipped below the $1800 level to reach $1784.60, before recovering above that level on Friday. The move lower could present an opportunity for gold bulls, who have driven prices over 1.13% higher on Monday to reach $1840.60 an ounce on optimism that a bottom may be in place for the metal.
Yet, while the move has boosted gold ETFs like the Direxion Daily Jr Gold Miners Bull 3X ETF (JNUG), which gained 2.8% Monday, some gold analysts are still concerned that the shiny metal may have more downside in the future.
“Technically, April gold futures bears still have the slight overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,878.90. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,771.30. First resistance is seen at today’s high of $1,840.60 and then at $1,850.00. First support is seen at today’s low of $1,807.30 and then at $1,800.00,” wrote Jim Wyckoff of Kitco news.
Sprott’s SGDM ETF Opportunity
Gold prices pulled back recently, but help could be on the way for bullion and exchange traded funds such as the Sprott Gold Miners ETF (NYSEArca: SGDM).
SGDM tracks the Solactive Gold Miners Custom Factors Index and “emphasizes gold companies with the highest revenue growth and free cash flow yield, and the lowest long-term debt to equity ratio,” according to the issuer.
“What is worth doing is looking at what were the main drivers of gold’s performance in 2020, and how are they shaping up in 2021,” reports Frik Els for Mining.com. “There is little doubt that buying into exchange-traded funds (ETFs) were the major factor in gold’s strong 2020, with World Gold Council (WGC) data showing a massive 120% surge in inflows to 877.1 tonnes in 2020, up from 398.3 tonnes in 2019.”
Other markets are also helping to generate interest in gold, as investors are moving into stocks, Bitcoin, silver, and many other commodities.
“Slowing coronavirus infections, continued rollout of vaccines and anticipation of President Biden’s $1.9 trillion rescue package are keeping the bull market well and truly alive,” said one broker in a morning email dispatch.
Investors are invigorated by news that Treasury Secretary Janet Yellen asked Congress to pass President Biden’s stimulus plan this weekend, suggesting that the results of the bill could include the U.S. gaining full employment by next year.
“There’s absolutely no reason why we should suffer through a long slow recovery,” Yellen said during an interview on CNN’s “State of the Union.” “I would expect that if this package is passed that we would get back to full employment next year.”
For investors looking for other gold ETFs, the VanEck Vectors Gold Miners ETF (GDX) and VanEck Vectors Junior Gold Miners ETF (GDXJ) are two options to consider.
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