After being crushed in the last three months thanks to a stronger dollar and lower demand, gold saw some respite yesterday on a dovish Fed stance. Gold rallied the most in three months, suggesting strong sentiment in the space, at least for the short term.
Gold started off 2015 on a strong note thanks to its safe-haven appeal as doubts over Greece’s fate in the Euro zone and the looming quantitative easing in that debt-ridden region were widespread. However, all returns soon turned into losses as the U.S. economy kept coming up with sturdy data especially on the jobs and housing front which made the case for a sooner-than-expected rate hike stronger.
The gold bullion ETF SPDR Gold Shares (GLD) lost about 6.5% in the last three months while gold mining ETF Market Vectors Gold Mining ETF (GDX) was off about 25%. However, yesterday, GLD added over 1.3% while GDX was up about 2.9%. GDX saw more gains as it often trades as a leveraged play on gold?