Will More Bearishness Cause Gold Prices to Crumble to DUST?

Gold has had an amazing run in 2020, but as the year winds down, will those price increases crumble to dust? Or will they feed into gains for the bears via 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.

The bulls have obviously been winning the majority of the war versus the bears in 2020, but is the chart showing signs of life for DUST?

DUST Chart

Providing tailwinds for DUST could be the U.S. housing market. Per a Kitco News report, the “U.S. housing market continues to be a bright spot in the U.S. economy as more consumers are buying homes according to the latest data from the National Association of Realtors (NAR).”

“Thursday, the NAR said Existing home sales increased 4.3%% last month to a seasonally adjusted and annualized rate of 6.85 million units, compared to September’s annualized rate of 6.54 million homes. Economists were expecting to see a sales rate of 6.45 million homes,” the article added. “For the year home sales are up a whopping 26.6%, the report said.”

“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” said Lawrence Yun, NAR’s chief economist in a statement.

That said, the article went on to say that the recent moves in housing have not affected gold much.

“The latest housing market data is having little impact on gold prices as the market remains under continued selling pressure, testing critical support,” the article said. “December gold futures last traded at $1,859.40 an ounce, down 0.79% on the day.”

“The surge in sales in recent months has now offset the spring market losses,” Yun added. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.” Yun forecasts existing-home sales to rise by 10% to 6 million in 2021.

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