Market Vectors Gold Miners ETF (NYSEARCA:GDX) witnessed a sell off during Friday’s trading session. The ETF collapsed by close to 2% on the back of the sharp sell off seen in gold which plunged to a fresh 5 year low. The ETF has been in a strong downtrend since the beginning of the year and currently trades below all daily moving averages which is a bearish sign. The relative strength index for the ETF has given a fresh sell signal indicative of overall weakness. Traders believe the ETF could head to levels of $12.60 in the near term.
Caxton Corp reduced its holdings in Market Vectors Gold Miners ETF (NYSEARCA:GDX) by two-thirds in the quarter ending September 30, an official filing with the Securities and Exchange Commission confirmed to market. It reduced its stake by 66% to 31,733 shares by the end of the third quarter.
Silver and gold are sitting right above major technical levels that would help decide if either a decline or bounce was ahead. Since then, encouraging U.S. economic data and strong dollar with rising stock market have helped to push yellow metal to a fresh six year low. Gold’s weakness prompted a technical breakdown under the key support level that was recordedin the summers.
Additionally, a pennant pattern seems to have formed that may be anindication of even more softness ahead, as long as gold stays under its resistance level. These kinds of patterns were seen in Canadian dollar and oil in last year’s bear market. It can come as a warning for investors in Market Vectors.
From major asset classes yellow metal has meaningfully had the biggest impact on Market Vectors returns. Expressed in straightforward terms, a jump of 1% in the SPDR Gold Trust ETF pushes Market Vectors up by almost 1.57%. Moves in bond markets and broader stock also have an effect on ETF but it is nearly three times smaller compared to gold.
Meanwhile, volatility levels and changes in oil price do not seem to influence Market Vectors performance. It is vital to note that a combination of all instruments highlights nearly 60% of GDX returns as suggested by the R-squared reading. Thus, there is still a considerableslice of gold miners’ returns dependent on other aspects.
The returns of the ETF has been extremely divergent compared to the last five years while Royal Gold, Inc. (NASDAQ:RGLD) and Franco-Nevada Corporation (NYSE:FNV) managed to record positive returns.