Gold futures are brandishing lustrous gains but a popular exchange-traded fund focused on companies that mine the yellow metal is en fuego.
The VanEck Vectors Gold Miners ETF GDX, +4.28% boasts a roughly 33% year-to-date gain, far surpassing gains of the underlying metal. Gold futures are up nearly 13% so far this year, by comparison, based on the most-active August contract trading on Comex GCQ19, +1.69% according to FactSet data. Prices of the yellow metal carved out a fresh six-year high at $1,428.10 an ounce, and gold miners have apparently been big beneficiaries.
Jeff deGraaf, technical analyst at research firm Renaissance Macro, said he sees room to run for gold and specifically the mining ETF in a Thursday research note.
“We see momentum building in the miners again and it’s likely that the next leg higher is starting with yesterday’s breakout,” the analyst wrote.
To put the gains for the GDX, referring to the ETFs ticker symbol trading on the NYSE Arca, into perspective, the Dow Jones Industrial Average DJIA, +0.01% is up nearly 17% in 2019 so far, the S&P 500 SPX, +0.36% has gained more than 19%, while the Nasdaq Composite Index COMP, +0.27% boasts a rich 24% climb over the past seven months.
Fawad Razaqzada, market analyst at Forex.com, said that gold has more room to run: “The bulls’ next target could be the underside of the rising trend capping the prior highs, which comes in around $1460, with the psychologically-important $1500 hurdle being the subsequent objective,” he wrote in a Thursday report.
Gold has benefited from a number of factors but popped in electronic trading late Thursday after New York Fed President John Williams made comments that the market implied as raising the likelihood that the Federal Reserve may take more aggressive action at the end of this month to stave off a tariff-induced slowdown in the economy. “When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress,” Williams said at a research conference.
Those comments at least partly helped to drive debt yields lower, with the 10-year Treasury note falling to 2.03%, as well as the dollar, which was down 0.5%, as measured by the ICE U.S. Dollar Index, providing bullish support for dollar-denominated bullion, which doesn’t offer yield, and the mining ETF, which has tended to see amplified moves compared against the metal.
Among the components of the fund, shares of Eldorado Gold Corp. ELD, +2.83% are up 167% year to date, Alacer Gold Corp. ASR, +6.07% has climbed 110%, while Semafo Inc. SMF, +0.37% is up 94% over the same period.
Even before Williams remarks, gold has been in rally mode, amid monetary policy around the globe that appear to be on a decided easing path and negative yielding sovereign debt that has made gold an attractive option to bulls. On top of that, a pair of hedge-fund investors also have recently endorsed gold, Bridgewater Associates Ray Dalio and Paul Tudor Jones.
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