The Federal Reserve could be getting the signs it needs to begin cutting rates. Cooler-than-expected inflation could pave the path for gold and in turn, lift the prospects for gold miners.
It was a much-needed reprieve from the sell-offs occurring in the broad equities market as tariffs, interest rates, and geopolitical tensions added a heavy dose of uncertainty. That spurred a flight to safe haven assets like the precious metal, which is up over 10% for the year. Potential rate cuts potentially lie ahead. That adds another layer of bullishness for the metal on the prospect of a weaker dollar.
With the metal prospering, gold miners have also been benefiting from the rise. Gold mining equites can often make a delayed move after the the metal’s price has already jumped. That leaves the door open for traders who may want to take an alternate play on the precious metal’s rally.
“Gold miners have been among the main beneficiaries of recent trade uncertainty, with investors increasingly turning to the precious metal as a safe haven amid aggressive tariffs from the new US administration,” Capital Brief noted. It added that the news of cooler-than-expected inflation data “lifted expectations for further interest rate cuts by the US Federal Reserve, with non-yielding gold typically thriving in a low interest environment.”
Mining for Trade Opportunities
As mentioned, if the precious metal can maintain its upward momentum, traders may want to consider looking at gold miners to make a delayed move to the upside. On that note, Direxion has a pair of leveraged exchange (ETFs) worth considering to capitalize on this move.
For broad exposure, consider the Direxion Daily Gold Miners Bull 2X ETF (NUGT ). The fund seeks daily investment results that equate to double the performance of the NYSE Arca Gold Miners Index. The index is a modified market-cap-weighted index comprising publicly traded companies that operate globally in developed and emerging markets. They are involved primarily in mining for the precious metal.
Traders who don’t mind the volatility small-caps can bring can consider the Direxion Daily Jr Gold Miners Bull 2X ETF (JNUG ). The fund gives 200% exposure to the daily performance of the MVIS Global Junior Gold Miners Index. That index tracks the performance of foreign and domestic micro-, small- and midcap companies that generate revenue from mining or similar activities. Whenever markets are trending higher, small-cap companies can make amplified moves to the upside.
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