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Gold Mining ETF (SGDJ) Hits New 52-Week High

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For investors seeking momentum, Sprott Junior Gold Miners ETF (SGDJ - Free Report) is probably on radar now. The fund just hit a 52-week high, and is up 44.1% from its 52-week low price of $21.30 per share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

SGDJ in Focus

This fund offers exposure to small-cap gold companies whose stocks are listed on major U.S. and Canadian exchanges. It holds 34 stocks in its basket, with Canadian firms taking the top spot at 64.7% followed by South Africa (12.6%) and the United States (8%). The fund charges 57 basis points (bps) in annual fees from investors (see: all the Materials ETFs here).

Why the Move?

The gold mining sector has been an area to watch lately given the spike in gold price buoyed by the Federal Reserve, which has signaled interest rate cuts as soon as next month. Lower interest rates will continue to weigh on the dollar and raise the yellow metal’s attractiveness as it does not pay interest like fixed-income assets. The prospect of easing money policies by other major central banks also boosted the yellow metal. The combination of falling yields, global growth concerns, rising Middle East tension and geopolitical tensions spurred demand for safe-haven assets, pushing up the price of gold. This is because gold is considered a great store of value and hedge against market turmoil.

More Gains Ahead?

It seems that SGDJ might remain strong given a higher weighted alpha of 16.70% but a high 20-day volatility of 26.01%. As a result, there is definitely still some promise for investors, who want to ride on this surging ETF a little further.

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