Ahead of the Federal Reserve announcement at its annual Jackson Hole meeting, gold prices dipped to a four-week low, with gold miners and sector-related exchange traded funds breaking below a key level.
The VanEck Vectors Gold Miners ETF (GDX) dropped 4.5% Wednesday, plummeting below its support at the short-term, 50-day simple moving average.
On the other hand, nvestors who hedged bets on miners with bearish options struck gold. On Wednesday, the Direxion Daily Gold Miners Bear 3X Shares (DUST) surged 14.2%, Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST) jumped 15.9%, ProShares UltraShort Gold Miners (GDXS) gained 8.0% and ProShares UltraShort Junior Miners (GDJS) increased 10.9%.
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Meanwhile, the SPDR Gold Shares (GLD) dipped 0.9% and also fell below its support at the 50-day level as Comex gold futures decreased 1.2% to $1,329.6 per ounce.
“The decline in gold today in my mind was mostly technical,” Kitco Senior Analyst Jim Wyckoff told CNBC. “Also, the outside markets are in a bearish posture.”
Trending on ETF Trends
Technical traders may keep tabs on the simple moving average to gauge short-term price trend of a security. Wyckoff warned that a close below the 50-day Wednesday for GLD and GDX would be more significant, reports Aparna Narayanan for Investor’s Business Daily.
“Some sell-stop orders were triggered in the futures market after key near-term technical support levels were breached,” Wyckoff said.
Markets will remain subdued up until Yellen’s Friday speech.
“We suspect that any hawkish tone emanating from [Yellen’s] speech regarding rates would have a negative impact on gold,” Edward Meir, an independent commodity consultant at INTL FCStone, told MarketWatch. “But this Fed has proved time and again that it is not one to surprise the markets and if anything, is far more timid than bold.”
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Moreover, a strengthening U.S. dollar is also pressuring gold markets. The Dollar Index (DXY) was 0.2% higher to 94.76 Wednesday.
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VanEck Vectors Gold Miners ETF