Gold’s rise to a 30% year-to-date gain may not have been easily predicted ahead of 2024. But at some point, it will dip. The precious metal has been faltering the past month. And that’s given the Direxion Daily Gold Miners Index Bear 2X Shares (DUST) almost a 13% gain.
As indicated by Reuters, gold appears to be headed for its worst month this year. Following the reelection of Donald Trump, prices have stagnated behind a dollar-fueled rally as investors embraced a risk-on sentiment.
The metal’s rally this year has been the result of anticipated rate cuts. But that may have been priced in early as 2024 comes to a close. Rising geopolitical tensions also spurred a flight to safe haven assets like precious metals. And central bank buying also supported the price of gold.
In contrast to the S&P 500, the index is up over 5%, giving credence to the notion that investors are feeling less risk averse. There’s uncertainty in 2025 as the new presidential administration takes office. But there are forecasts swirling that support the idea that corporate tax cuts should fuel stocks in the new year.
That’s not to say that there’s no hope that gold’s rally will continue. That same uncertainty could also work in its favor.
When Bullishness Returns
Global tensions can help sustain gold’s rally as well as continued central bank buying. The fundamentals of the precious metal as a safe haven asset should continue appealing to investors feeling jitters in the new year.
“Persistent global uncertainties continue to drive demand for gold as a safe-haven asset,” said Ole Hansen, head of commodity strategy at Saxo Bank
Traders can get alternate gold exposure via miners with the Direxion Daily Gold Miners Bull 2X ETF (NUGT). The fund takes the opposite direction of DUST, doubling the performance of the NYSE Arca Gold Miners Index. The index is a modified market-cap-weighted index comprising publicly traded companies that operate globally in developed and emerging markets and are involved primarily in mining for the precious metal.
Additionally, small-cap companies can make profound moves to the upside when a rally is underway. That said, another option to capitalize on gold’s momentum is the Direxion Daily Jr Gold Miners Bull 2X ETF (JNUG). The fund gives 200% exposure to the daily performance of the MVIS Global Junior Gold Miners Index. That index tracks the performance of foreign and domestic micro-, small- and midcap companies that generate revenue from mining or similar activities.
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