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Direxion Shares Exchange Traded Fund Trust (NUGT) To Benefit from Increase Demand for Gold

Gold (NUGT)

Direxion Shares Exchange Traded Fund Trust continues on its bullish ascent today — the uptrend in the demand for had gold triggered fastest start for the bullion ever among precious metals this year. This morning, the ETF was up 3.55% because investors’ appetite for the yellow metal is on the increase and it doesn’t appear that the demand will slow down anytime soon.

Gold (NUGT)

Gold started 2016 on an impressive note, it was the best-performing asset in the first quarter, and it is already up more than 20% in the year-to-date period. The bullion is a nice golden nest and investors are taking their money back out of equities and are now putting it into the yellow metal. Nonetheless, the signals are mixed this morning as the bullion struggles to hold on to previous gains. This morning, spot gold was down 0.5% to $1,269.30 after it has gained almost 1% to $1,275.50 an ounce on Wednesday.

Demand is pushing gold through the skies

Latest data from a World Gold Council report released this morning revealed that gold demand has increased from 1,070.40 an ounce in Q1 2015 up to 1,298.80 in Q1 2016 to mark a 21% year-over-year increase. The council notes that gold demand climbing 21% in the first quarter is the fastest pace of growth on record. The council observed the yellow metal has been on a mostly bullish ascent even though inflation keeps a lid on gold demand in much of the developed world.

The WGC officials also posit that the three main points driving the demand for bullion are firstly, increased possibility that the U.S. Federal Reserve will be slow to raise interest rates. Secondly, the demand for the yellow metal is rising because of the Chinese currency devaluation. Thirdly, the fact that central banks in Japan and Europe are adopting negative interest rates is also pushing the demand for the bullion.

Juan Carlos Artigas, director of investment research at WGC notes that the bullish trend in the yellow metal seems to have enough momentum for the long term.  He notes that “we do think that a good portion of the activity that we’ve seen so far this year is linked to strategic perspectives on gold… See it as much more of a long-term strategic asset and are coming back again.” Without much ado, the bullish tendency in the yellow metal should also drive bullish momentum for the Direxion Shares Exchange Traded Fund Trust .

Should you buy gold?

The Direxion Shares Exchange Traded Fund Trust and the yellow metal were impressively upbeat yesterday after Wall Street bankers voiced their bullish support for gold. Analysts at JPMorgan  revealed that the bullion is in a new rally and they revealed that they were “recommending our clients to position for a new and very long bull market for gold.”

It is also worthy of note that analysts at Goldman Sachs have raised their price targets on the bullion for the next one year. I wrote that Goldman Sachs analysts raised the “three-month outlook from $1,100 to $1,200; it raised its six-month outlook from $1,050 an ounce to $1,180; and it raised the 12-month outlook from $1,000 per ounce to $1,150 an ounce.”

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.