The Dow Jones Industrial Average fell 300 points on Tuesday, giving safe-haven assets like gold a boost through leveraged exchange-traded funds (ETFs) like the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG) and Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT). JNUG gained 1.68 percent while NUGT rose 2.07 percent.
A strong U.S. dollar stymied gold for much of 2018, but global growth concerns and other broad market worries could give the precious metal a boost in 2019. A confluence of the aforementioned market worries could trigger gold prices as investors seek to the precious metal for safe haven options.
After four rate hikes in 2018, the Federal Reserve pausing interest rates in 2019 could also result in a weaker dollar and stronger demand for gold. On Tuesday,
“Overall, while the increasing ‘short-termism’ amongst investors has ensured it’s been rather easy to look through the public debt issue largely in the U.S., history reminds us that the confluence of risky and unpredictable policies, excessive borrowing and higher interest rates pose a toxic threat. Gold is a real asset and currency hedge against unchecked and massive US and global debt growth,” said analysts at Scotiabank.
“Overall, gold can mildly rally in a quantitative tightening cycle if the Feds outlook creates enough uncertainty to global risk assets and/or if the Fed remains behind the inflation curve ensuring real rates remain close to zero,” the analysts added. “Gold will suffer if there is certainty around QT and confidence for a soft-landing increases.”
Palladium Prices Retreat
The price of palladium retreated 0.76 percent as gold was rising. As such, the Aberdeen Standard Physical Palladium Shares ETF (NYSEArca: PALL) fell almost 3 percent.
Last week, palladium soared past $1,400 an ounce. Last month, the price of palladium bested gold for the first time in 16 years.