Gold Bugs Hit the Bricks Ahead of Fed

Gold is selling off today in anticipation of a Federal Reserve rate hike

by Karee Venema

Published on Sep 11, 2015 at 10:47 AM
Updated on Jun 24, 2020 at 10:16 AM

The major U.S. benchmarks have gotten off to a rough start this morning, as anxiety sets in ahead of next week's highly anticipated central bank meeting. The big question remains as to whether or not the Federal Reserve will raise interest rates for the first time since 2006. One sector that's benefited from nearly a decade's worth of low interest rates is gold, but, in preparation for Wednesday's announcement, a number of gold bugs are hitting the exits en masse.

The Daily Junior Gold Miners Index Bull 3x Shares (NYSEARCA:JNUG), for example, has plunged 5.9% to $6.66 -- and is within a chip-shot of taking out its Aug. 26 all-time low of $6.48. Conversely, the Daily Junior Gold Miners Index Bear 3x Shares (NYSEARCA:JDST) has popped 7% to linger near $12.26; although, today's upside appears to be running out of steam near the exchange-traded fund's (ETF) 40-day moving average.

Elsewhere, the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) has shed 2.2% to trade at $18.56 -- and is hovering less than 4 percentage points above its July 24 all-time low of $17.92. Meanwhile, the Market Vectors Gold Miners ETF (NYSEARCA:GDX) is at a new low today, down 3.2% at $12.69. 

Among specific equities, notable laggard Barrick Gold Corporation (USA) (NYSE:ABX) is trading near a new 25-year low of $5.99. It's already been a tough month for the shares, and the worst may not be over.

Silver Wheaton Corp. (USA) (NYSE:SLW), meanwhile, is 2.1% lower at $11.18 -- and fresh off a six-year low of $11.11 -- widening its year-to-date deficit to 45%. A price-target cut to $23.50 from $24 is only exacerbating Goldcorp Inc.'s (USA) (NYSE:GG) troubles, with the shares down 2.4% at $12.38, after earlier notching a 10-year low of $12.31. Unfortunately for GG, more bearish brokerage notes could be on the horizon.

Agnico Eagle Mines Ltd (USA) (NYSE:AEM) isn't escaping the sector headwinds, surrendering 1.4% to churn near $21.52. Short interest surged on AEM by 44% in the last two reporting periods, and this downside may bring more bears to the table. Hecla Mining Company (NYSE:HL) has also seen a rise in short interest of late -- up 19.4% in the past two reporting periods -- and today, these shorts are likely celebrating. HL is off 5.3% at last check at $1.78.

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