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Direxion Daily Gold Miners Index Bull 2X Shares (NYSE:NUGT) gapped up 3% to start Wednesday’s trading session and after some early session volatility, the ETF surged an additional 3% from the open due to bullish price action across the gold sector.
The climb higher was in tandem with the S&P 500, which closed up about 3.15% higher after Fed Chair Jerome Powell suggested during his Brookings Institution speech that the central bank could begin easing back on its interest rate hikes in December.
The gold miners sector recently reversed into a bull-cycle, after a long-term downtrend brought NUGT down 75% from its April 18 52-week high of $82.86 to a Sept. 26 52-week low of $20.30.
NUGT is a double-leveraged fund that is designed to outperform the NYSE Arca Gold Miners Index by 200%. The ETF tracks a number of gold and silver mining companies, with Newmont Corp (NYSE:NEM), Barrick Gold Corp (NYSE:GOLD) and Franco-Nevada Corp (NYSE:FNV) making up 32.42% of its holdings.
It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to a long-term investment by experienced traders. Leveraged ETF’s should never be used by an investor with a buy-and-hold strategy or those who have low-risk appetites.
For traders wanting to play the gold mining index bearishly, Direxion offers Direxion Daily Gold Miners Index Bear 2X Shares (NYSE:DUST).
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The NUGT Chart: NUGT reversed into its uptrend on Nov. 3 and has since made a consistent series of higher highs and higher lows. NUGT’s most recent higher low was formed on Monday at $30.82 and the most recent confirmed higher high was printed at the $34.46 mark on Nov. 23.
See Also: Could More Countries Start Using Gold Coins to Fight Inflation?