Gold Traders Keep an Eye on the Vaccine Rally

Gold traders are keeping a close watch on the latest developments in a Covid-19 vaccine, which could keep gold prices at bay following its recent rally. The recent decline has also been paired by a run up for yields, which should keep fixed income investors happy.

“Gold prices and US 10 year real yields have held a strong negative relationship over time. That’s largely because when US yields rise, gold looks less attractive since gold earns no income,” Vivek Dhar, mining and energy commodities analyst from Commonwealth Bank of Australia, said in a note per a CNBC report.

All in all, with positive news on a vaccine coming out of Russia, a renewed risk appetite is bringing investors out of safe havens like gold.

“Risk appetite returned following encouraging economic numbers and news reports of a new effective coronavirus vaccine in Russia increased risk appetite further lowering expectations of further monetary stimulus making Gold less attractive,” said a note by brokerage Phillip Futures.

“The rising US Dollar also did not lend support to precious metals,” it added.

Traders who are sensing a buy-the-dip opportunity can also play movements in gold via miners 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.

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