This article was originally published on ETFTrends.com.
The Dow Jones Industrial Average fell 300 points on Tuesday, giving safe-haven assets like gold a boost through leveraged exchange-traded funds (ETFs) like the Direxion Daily Jr Gold Miners Bull 3X ETF (JNUG) and Direxion Daily Gold Miners Bull 3X ETF (NUGT). JNUG gained 1.68 percent while NUGT rose 2.07 percent.
A strong U.S. dollar stymied gold for much of 2018, but global growth concerns and other broad market worries could give the precious metal a boost in 2019. A confluence of the aforementioned market worries could trigger gold prices as investors seek to the precious metal for safe haven options.
After four rate hikes in 2018, the Federal Reserve pausing interest rates in 2019 could also result in a weaker dollar and stronger demand for gold. On Tuesday,
“Overall, while the increasing ‘short-termism’ amongst investors has ensured it’s been rather easy to look through the public debt issue largely in the U.S., history reminds us that the confluence of risky and unpredictable policies, excessive borrowing and higher interest rates pose a toxic threat. Gold is a real asset and currency hedge against unchecked and massive US and global debt growth,” said analysts at Scotiabank.
“Overall, gold can mildly rally in a quantitative tightening cycle if the Feds outlook creates enough uncertainty to global risk assets and/or if the Fed remains behind the inflation curve ensuring real rates remain close to zero,” the analysts added. “Gold will suffer if there is certainty around QT and confidence for a soft-landing increases.”
Palladium Prices Retreat
Last week, palladium soared past $1,400 an ounce. Last month, the price of palladium bested gold for the first time in 16 years.
"In the long run, we believe that palladium will continue to benefit from exceptionally strong supply/demand, resulting in yet higher prices," said George Gero, managing director at RBC Wealth Management. "However, in the near future, we believe that palladium is due a correction."
Compared to NUGT, however, PAL has been besting the leveraged gold ETF through 2018 and increased the margin even further towards year's end.
“Palladium is in the red again as traders lock in their profits,” said David Madden, market analyst at CMC Markets UK. “Despite the recent pullback, it remains it is wider upward trend, so we might see buyers enter the fold.”
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