The Market Vectors Gold Miners ETF (GDX) surged almost 7% in trading Tuesday as a faltering U.S. dollar continued to drive up gold prices. As investors looking to hedge against inflation and a slumping greenback have rushed into gold, stocks of companies engaged in mining the precious metal have been given a boost as well. Gold for December delivery reached a record $1,045 an ounce in morning trading on the NYMEX Exchange. The SPDR Gold Trust (GLD) ended Tuesday’s session up about 2.5%.
Skyrocketing gold prices are expected to strengthen revenues of global mining firms. Since a significant portion of the cost structure for many of these companies is fixed, increases in metal prices can drop straight to the bottom line, giving the components of GDX a major shot in the arm.
After posting strong gains in the week’s first session, the United States Natural Gas Fund (UNG) pulled back sharply on Tuesday, dropping about 2.5% on the day. The Energy Information Administration released its Short Term Energy and Winter Fuels Outlook (PDF), projecting that average household expenditures on heating fuels will drop by about 8% this year, a reflection of lower fuel prices and lower usage in some areas as a result of mild weather. UNG had gained more than 6% on Monday following reports of unseasonably cool weather in certain parts of the country over the next two weeks.
Disclosure: No positions at time of writing.