Gold Mining Sector Turns Bearish Following Economic Data: This ETF Offers Exposure When Gold Rebounds

Spot gold prices declined by about 1.25% on Thursday, triggered by the release of advance estimates data by the U.S. Bureau of Economic Analysis.

The data revealed that the U.S. economy grew at a 2.4% annualized rate in the second quarter of 2023. Read More...

The week ending July 22nd also saw a decline in unemployment, indicating the labor market's continued strength. This data suggests that the Federal Reserve has been successful in avoiding a recession, which is bearish for gold and gold miners.

Despite the drop, spot gold managed to hold above the 50-day simple moving average, raising the possibility of a potential rebound. When the sector turns bullish, investors may wish to take a position in the Sprott Gold Miners ETF SGDM, to gain exposure to several gold miners.

The fund tracks 30 larger-sized gold mining companies and corresponds to the total return performance of the Solactive Gold Miners Custom Factors Index. As of now, SGDM has total net assets of $257,956,220.39 and just 9,550,000 shares outstanding.

The three largest holdings within SGDM are Barrick Gold Corp GOLD, weighted at 11.04%, Franco-Nevada Corp FNV, weighted at 10.4% and Agnico Eagle Mines AEM, which is weighted at 9.73%.

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The SGDM Chart: Mirroring spot gold, SGDM was dropping over 3% on Thursday, attempting to hold support above the 200-day simple moving average (SMA). The area acted as support between June 26 and July 10, when the ETF temporarily fell under the 200-day SMA before popping up above the area.

• The ETF was working to print a bearish kicker candlestick Thursday, which could indicate lower prices are on the horizon. If SGDM falls under the 200-day, bullish traders will want to see the ETF consolidate sideways under the area for a period of time.
• Bearish traders want to SGDM fall under the 200-day SMA on higher-than-average volume, which could accelerate a move to the downside.
• SGDM has resistance above at $26.51 and at $27.82 and below at $25.14 and at $23.65.

Read More: Looking For A Pure-Play Nickel ETF? Sprotts' NIKL Fund Holds 28 Miners, Including One Supplier To Tesla, GM