Gold prices continue to trend higher as the precious metal continues to push past the $2,100 price level. Consequently, record highs could boost mining stocks and leveraged exchange traded funds (ETFs) that make them their prime focus.
As reported by the Wall Street Journal, gold fever continues to run hot in 2024 thanks to a confluence of factors. This includes geopolitical tensions pushing investors into safe havens, the anticipation of rate cuts, and algorithmic trading.
“Gold futures were most recently trading at $2,164.5 a troy ounce, and spot prices for the precious metal are up 9.1% compared with a month ago,” the report said. “Over the past year, spot gold prices rose 14%.”
Demand from China will also be a catalyst for more bullish gold prices. The WSJ article mentioned that strong physical demand for gold amid China’s Lunar New Year led to government data showing that “gold and jewelry sales rose 24% over the holiday.” Other parts of the globe are seeing strong demand as well with strong buying from Japan and India.
“We know that China is increasing gold purchases amid rising tensions with the U.S. and its property crisis, [and]other emerging market central banks are also diversifying away from the dollar,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank told Dow Jones Newswires.
2 Leveraged Options for Gold Miners
A potential byproduct of increased gold demand could be a need for gold miners. In that instance, Direxion Investments has a pair of leveraged mining options to consider. One is the Direxion’s Daily Gold Miners Index Bill 2X Shares (NUGT), which seeks daily investment results that equate to 200% of the performance of the NYSE Arca Gold Miners Index. The index itself is a commodity related equity index, consisting of a basket of gold miner related stocks. The index does not invest in physical commodities. Observers should not expect it to directly track the price performance of gold.
Another option for traders who want to amplify gains further by adding exposure to small cap mining companies, they should take a closer look at the Daily Junior Gold Miners Index Bull 2X Shares (JNUG). With its extra leverage, JNUG 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. This includes “emerging markets,” as that term is defined by the index provider.
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