Investors betting that a torrid rally in gold miners has room to run face a test of their conviction as the US government gets set to deliver jobs data from August.
An unexpectedly weak reading in July, along with Donald Trump’s jawboning of Federal Reserve officials, all but clinched a rate cut later this month. That prompted investors to pour $531 million into the VanEck Gold Miners ETF last month, the most since November 2023.
The fund had seen consistent outflows all year, as investors took profits on worries the US economy’s resilience would upend gold’s record run. The metal is coveted as a hedge against economic weakness. It also attracts buyers when the dollar falls or inflation rises — both of which could happen if the Fed cuts rates and Trump’s tariffs lead to price increases.
The August jobs report is due at 8:30 a.m. in New York, perhaps the most significant of three major data releases, along with readings on consumer and producer prices, before the Fed’s rate decision in two weeks. Any signs of strength in the labor market could reduce bets for further rate cuts this year.
The VanEck ETF is up some 90% this year, with many of its members rising by triple digits. Newmont Corp., the lone gold miner in the S&P 500 Index, has doubled for the third-best advance in the index. But investors had been pulling funds from the ETF in all but one month through July. Now, with economic uncertainty rising, and gold basking in its role as a safe haven, investors are doubling down.
For Ryan McIntyre, senior managing partner and senior portfolio manager at Sprott Inc., the change in taste also represents something of a leveraged bet on the metal’s prospects. For every 1% gain in the price of gold, mining equities tend to climb 2%, he said.
That’s been borne out in the ETF’s price and by many of its components. Barrick Mining Corp. has jumped 75% and Agnico Eagle Mines Ltd. is up 90% this year. Small-cap stocks are faring even better: Discovery Silver Corp. has soared about 500% in 2025. Gold and silver have gained at least 33%.
JPMorgan analysts expect gold’s tear to continue as Fed rate cuts spur more investors to buy ETFs of commodities that track the metal. That forces the funds to purchase the underlying asset, adding to demand.
JPMorgan analysts also warned that Trump’s pressure on the central bank would have the same effect.
“We believe any potential weakening of the US Federal Reserve’s independence could have significant long-term implications for gold prices,” the bank’s analysts wrote.
The August flows picked up at the end of the month, with investors buying up $3.9 billion in gold-linked ETFs last week, marking their “strongest weekly inflows” since Trump unveiled his sweeping tariff program in April, according to a Tuesday note from BMO Capital Markets analyst Helen Amos.
“You’ve got to find assets that are different than super-cap tech,” Macro Risk Advisors CEO and founder Dean Curnutt said Tuesday, adding gold had several tailwinds including global central bank demand, which now collectively hold more gold than US Treasuries.
Investors piling into the trade should be aware of the risk of a swift selloff if the macro environment changes, investment strategist Jim Paulsen wrote Thursday. There’s also the risk that gold mining stocks don’t provide as sturdy of a hedge against market risks as the metal itself, because miners’ fortunes are also subject to the economic backdrop.
Still, Sprott’s McIntyre said investors have been buying up both – the physical asset as well stocks in companies that mine it.
“With elevated economic-policy uncertainty and a dollar index likely to drive lower, the bullion price should remain well-supported,” Hugo Ste-Marie, director of portfolio and quantitative strategy at Scotiabank, wrote in an Aug. 29 note. “Gold equities have more room to run.”
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