A Technical Look at Gold Mining ETF- GDX
If we take a look at GDX – a popular gold mining ETF on the market with AUM of $8 billion and a trading volume of roughly 30 million shares a day – the downtrend gets more visible. The fund was down over 7% last week though it has gained about 5% in the year-to-date frame.
The Relative Strength Index for GDX is presently 29.4 suggesting that the fund is in an oversold territory. The short-term moving average (9-day) for GDX is well below the mid-term average (50-day) suggesting continued bearishness for this ETF. The current price of GDX is trading below the parabolic SAR (PSAR) indicating a bearish trend for the product.
The near-term certainly looks shaky for the gold mining space with the past few weeks being hard hit. Steep losses have been incurred, although this has only rubbed out prior gains. At this moment, we don’t find any meaningful driver though a wild ride can be witnessed if any U.S. economic data falls short of expectation, growth in China accelerates or emerging market woes return to the picture.
Also, if the stock market succumbs to a correction following the hike in interest rates, gold might see a short-term turnaround as the commodity and the related products are presently hovering in the oversold territory.
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