Nearly 92% of stocks in the VanEck Gold Miners ETF (GDX) now trade below their 50-day moving average. The share last ran this high in late July, just before miners posted a record month.
The reading lands days before Wednesdays Federal Reserve decision, with traders still pricing a possible rate hike this year.
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How Gold Miners Went From August Leaders to Oversold in 21 Sessions
SentimenTrader data shows the share of GDX stocks above their 50-day average dropped from over 90% to 8% in 21 sessions.
Gold Miners ETF Breadth. Source: The Kobeissi Letter/SentimenTrader
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About 90% also trade below their 200-day average, the highest share in 3 months, per The Kobeissi Letter.
Gold has fallen less sharply, trading at $3,983.91, down 3.19% from a month ago. The metal slipped below $4,000 on Friday for the first time since July.
Operating leverage amplified miners gains over the summer. The MSCI global gold miners index jumped 43% in August, while gold gained about 13%.
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Miners also trade as stocks, so they caught last weeks equity selloff. Newmont fell 3.7% in Australia on Friday as the ASX mining sector dropped 3.74%, Capital Brief reported.
What Past Washouts Signal for Gold Miners Heading Into the Fed
Earlier readings this extreme ended in sharp rebounds. The Kobeissi Letter points to similar setups in March 2024 and December 2024. GDX rallied 21.5% and 15.4%, respectively, over the following month.
The late July washout followed the same path. However, that rally had a clear trigger in the US Treasurys buyback plan.
Margins also leave miners room to recover. Newmont, the worlds largest gold miner, reported third-quarter all-in sustaining costs (AISC) of $1,454 per ounce. Gold trades about $2,530 above that level.
Interest rates still pose a risk, with traders pricing a 75.4% chance of a December hike, per CME FedWatch. Higher rates raise the cost of holding gold, which pays no interest.
Wednesdays decision will offer the first test of whether this washout repeats the July script.