Gold prices are down about 13% within the past six months as they continue to face downward pressure from rising inflation, which is fueling a hawkish U.S. Federal Reserve. This, however, is opening up opportunities for bearish traders of gold ETFs.
As a CNBC report noted, a combination of rising interest rates from a tightening Federal Reserve paired with a strong dollar is “continuing to pressure gold and are overwhelming any safe-haven demand currently arising from the latest escalation in the Ukraine crisis, said David Meger, director of metals trading at High Ridge Futures.”
“We’re back at $1,680 level again… and gold will remain under some downside pressure in the short term,” said Ross Norman, an independent analyst.
Short-term opportunities can be available in leveraged exchange traded funds (ETFs). These ETFs are tactically designed for short-term moves, making them a prime option in the current market.
2 ETFs to Be Bearish on Gold
As opposed to taking an inverse or short position on gold prices directly, there’s also an alternate play via gold miners. Traders looking for an extra dose of leverage can look to funds such as the Direxion Daily Gold Miners Index Bear 2X Shares (DUST).
DUST seeks daily investment results before fees and expenses of 200% of the inverse of the daily performance of the NYSE Arca Gold Miners Index. The fund invests in swap agreements, futures contracts, short positions, or other financial instruments that, in combination, provide inverse or short leveraged exposure to the index equal to at least 80% of the fund’s net assets.
The index is a modified market-capitalization-weighted index comprised of publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in mining for gold and, to a lesser extent, silver.
Another option traders can utilize is focusing on smaller-cap gold mining companies. This strategy is inherent in the Direxion Daily Jr Gold Miners Bear 2X ETF (JDST).
JDST seeks daily investment results equal to 200% of the inverse of the daily performance of the MVIS Global Junior Gold Miners Index, which tracks the performance of foreign and domestic micro-, small-, and mid-capitalization companies. The fund invests in swap agreements, futures contracts, short positions, or other financial instruments that, in combination, provide inverse or short leveraged exposure to the index equal to at least 80% of the fund’s net assets.
For more news, information, and strategy, visit the Leveraged & Inverse Channel.