The dollar took a step back as a result of weaker-than-expected retail sales data last week, propping up leveraged gold miner funds and the Direxion Daily Jr Gold Miners Bull 3X ETF (JNUG) and the Direxion Daily Gold Miners Bull 3X ETF (NUGT).

“Gold prices continued to rally as the dollar eased in the wake of the softer-than-expected retail sales report. Import prices along with export price rose more than expected,” an FX Empire report said. “Yields declined on Friday for a third straight trading session which weighed on the greenback and buoyed the yellow metal.”

The economic reopening and injection of stimulus dollars may have given analysts a predilection for stronger retail sales data. That, however, didn’t come to fruition, at least during the month of April.

“U.S. retail sales unexpectedly stalled in April,” the FX Empire report said further. “The Commerce Department reported that April retail sales were unchanged following a 10.7% surge in March, an upward revision from the previously reported 9.7% increase.”

“Expectations were for retail sales to rise by 1% in April,” the report added further. “Excluding automobiles, gasoline, building materials and food services, retail sales dropped 1.5% last month after an upwardly revised 7.6% increase in March. Core retail sales correspond most closely with the consumer spending component of gross domestic product.”

Inflation Fears Push ‘JNUG’ and ‘NUGT’ Higher

Investors may be re-developing an appetite for gold again as a safe haven play.

Weaker purchasing power as a result of inflation could be feeding into bearishness for the dollar. Rather than make a play on gold to capitalize on greenback weakness, investors can also use miners to enjoy more price stability.

JNUG, which is up 4% the past month, gives 200% exposure to 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.

JNUG Chart

NUGT is up 11% the past month, and seeks daily investment results equal to 200% of the daily performance of the NYSE Arca Gold Miners 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.

NUGT Chart

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