Gold prices are up 13% for the year, but different market experts are forecasting varying scenarios for the precious metal moving forward. Nonetheless, whether prices head up or down and regardless of how it effects miners, traders can play the moves with leveraged exchange traded funds (ETFs).
Given the current upside, there’s much optimism surrounding gold. Technical price indications are telling some market experts that the upside can continue, and if that’s the case, traders can look at miners with the Direxion Daily Gold Miners Bull 2X ETF (NUGT ). The fund provides 200% exposure to the NYSE Arca Gold Miners Index, which 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.
“We are in a healthy uptrend with gold finding strong support at $2,300,” said Adam Butler, senior account executive at Anthem Gold Group. “I think we will continue in an uptrend, potentially closing June above $2,450.”
Of course, playing a factor in gold’s moves will be what the U.S. Federal Reserve does with interest rates though the capital markets are largely predicting they will head lower, but when? With the 2% target inflation rate still not achieved, the higher-for-longer interest rate narrative could continue.
“Fed officials indicated that it would take longer than previously anticipated to gain greater confidence in inflation moving to 2%,” said Jack Brown, owner of Mid-states Recycling and Refining, a precious metals refinery in Des Plaines, Illinois. “This delay could result in a trending increase in metal prices through the latter part of July and into the fall.”
The Bearish Case for Gold
At some point, market physics will take hold and gold will eventually pull back to some degree. Some market purveyors are already sensing that gold prices could be reaching an apex.
“Even though the price of gold is still near an all-time high and has made large gains over the past 12 months, prices may have peaked in the short-term,” said Stuart Boxenbaum, president of Statewide Financial Group.
“June may be weaker as market participants take profit,” said Russell Shor, senior market specialist at trading platforms FXCM Markets and Tradu.. “It was trading off its highs into month-end. That may mean a pullback in the yellow metal is due.”
If that’s the case, traders can take the opposite side of miners with the Direxion Daily Gold Miners Index Bear 2X Shares (DUST ). Both NUGT and DUST speak to the flexibility of leveraged ETFs, giving traders the freedom to move and potentially profit irrespective of what gold prices do.
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