Positive unemployment data resonated in the gold markets with prices responding to the upside during Thursday’s trading session. However, even as unemployment claims drop, gold prices are still prone to react to changes in the labor market through the rest of 2020.
“The U.S. Labor market continues to slowly improve a fewer workers applied for weekly unemployment benefits than expected,” a Kitco News article said. “Thursday, the Labor Department said that 837,000 Americans filed for first-time U.S. jobless claims in the week to Saturday a decrease of 36,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 to 870,00. This is the lowest reading in unemployment claims since the economy was devastated by the COVID-19 pandemic. According to consensus estimates, economists were expecting claims to come in around 850,000.”
However, gold investors shouldn’t take this as a sign of further bullishness just yet.
“The better-than-expected labor market data is not having much impact on the gold markets as prices hold above $1,900 an ounce in initial reaction to the data,” the article added. “Although weekly unemployment benefits continue to inch lower, economists have said that the labor market still has a significant ways to go to reach the levels seen back in February.”
Investors looking to get gold exposure can look at funds like SPDR Gold Shares (GLD ) and the SPDR Gold MiniShares (GLDM). Precious metals like gold offer investors an alternative to diversify their holdings, and like other commodities, gold will march to the beat of its own drum compared to the broader market.
As a backdoor play, ETF investors can get gold exposure via miners using the following funds:
- VanEck Vectors Gold Miners (GDX ): seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE® Arca Gold Miners Index®. The index is a modified market-capitalization weighted index primarily comprised of publicly traded companies involved in the mining for gold and silver.
- Direxion Daily Jr Gold Miners Bull 3X ETF (JNUG ): seeks daily investment results, before fees and expenses, of 200% of the daily performance of the MVIS Global Junior Gold Miners Index. The index includes companies from markets that are freely investable to foreign investors, including “emerging markets,” as that term is defined by the index provider.
- Direxion Daily Gold Miners Bull 3X ETF (NUGT ): seeks daily investment results, before fees and expenses, of 200% of the daily performance of the NYSE Arca Gold Miners Index. The index is comprised of publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in the mining for gold and, in mining for silver.