Gold miner stocks and sector-related ETFs strengthened Monday as gold prices climbed to a more-than-one-week high on a weakening U.S. dollar in response to data showing U.S. wage growth slowed last month.
Among the top performing non-leveraged ETFs of Monday, the VanEck Vectors Gold Miners ETF (NYSEArca: GDX) rose 1.1%, U.S. Global GO GOLD and Precious Metal Miners ETF (NYSEArca: GOAU) increased 1.7%, Sprott Gold Miners ETF (NYSEArca: SGDM) added 0.9% and iShares MSCI Global Gold Miners Fund (NYSEArca: RING) gained 1.5%.
Meanwhile, Comex gold futures advanced 0.5% to $1,302 per ounce.
Gold strengthened off the weak U.S. dollar. Commodities typically exhibit an inverse relationship to the greenback as raw materials and precious metals become more attractive to foreign buyers when the USD is weaker.
“The dollar index is pulling back from multi-week highs and gold prices are riding this tailwind of softer dollar,” Margaret Yang, a market analyst with CMC Markets, told Reuters.
The Dollar Index, which tracks the USD against a basket of developed market currencies, slipped 0.4% to 97.05.
Furthermore, investors were looking into precious metals as a way to hedge against potential risks ahead, especially in light of softening economic data.
“Though the non-farm payrolls data was better than expected, the manufacturing jobs fell which is a bad signal for the sector and doesn’t show a very bright picture of the economic outlook,” Yang added.
Market volatility has also been closely tied to developments in the U.S.-China trade negotiations.
“But ultimately the wild card remains the U.S.-China trade negotiations,” Stephen Innes, head of trading and market strategy at SPI Asset Management, told Reuters, adding that the equity markets will spike on news of an agreement, denting the near-term appeal of gold.
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