A Welcome Sign For Gold ETFs As Fed Meets
London (Sept 17) Major index ETFs notched stock market gains Wednesday as the Fed began a highly anticipated two-day meeting on a potential rate hike. Gold prices rose, lifting exchange traded funds holding the precious metal and mining stocks.
The largest gold ETF retook its 50-day line and is bagging a weekly gain so far after three straight weekly declines.
Gold broke out of recent range-bound trade on reports that consumer prices slipped in August for the first time in seven months. Mild inflation could muddle the Federal Reserve's decision on raising interest rates.
Gold prices rose Wednesday after data indicated tame inflation in August.
Gold prices rose Wednesday after data indicated tame inflation in August. View Enlarged Image
Typically, higher rates weigh on gold, a non-yielding asset.
Sprott Gold Miners (ARCA:SGDM) traded 6.8% higher on the stock market today. The ETF holds 25 stocks, whose prices have been gouged in 2015 as gold tumbled.
Mining stocks are considered a leveraged play on the physical metal itself.
Among SGDM's holdings, Eldorado Gold and Kinross Gold led with a 10% gain each.
The ETF hit a new low of 11.61 Friday and is 41% off its 52-week high, set exactly a year ago.
Exchange traded funds holding energy stocks also gained as weekly crude stockpiles unexpectedly dipped.
As oil prices jabbed 5% higher Wednesday, the energy sector led the S&P 500 index higher.
Energy Select Sector SPDR (ARCA:XLE) advanced 2.8%.
SPDR S&P Oil & Gas Equipment & Services (ARCA:XES) jumped 4.4%.
Biotech ETFs sold off.
Among international ETFs, China A-shares topped. The benchmark Shanghai Composite Index rallied 5% Wednesday.