Almost 92% of GDX Stocks Fell Below 50-Day Average Ahead of Fed Decision

Approximately 92% of stocks in the VanEck Gold Miners ETF (GDX) are currently trading below their 50-day moving average. The last time this figure was this high was at the end of July, shortly before miners (gold mining companies) had a record month. This data comes just days before the Fed's decision on Wednesday, with traders still pricing in a possible rate hike this year.

How miners went from August leaders to oversold in 21 sessions

According to SentimenTrader, the share of GDX stocks above the 50-day average fell from over 90% to 8% in 21 sessions. About 90% are also trading below the 200-day average, the highest in three months, according to The Kobeissi Letter.

Gold has fallen less sharply: it is trading at $3,983.91, which is 3.19% lower than a month ago. On Friday, the metal fell below $4,000 for the first time since July.

Operational leverage boosted miners' growth in the summer: the MSCI index of global gold miners rose by 43% in August, while gold added about 13%. Miners also trade like stocks, so they were caught in last week's stock market sell-off. Newmont fell 3.7% in Australia on Friday amid a 3.74% decline in the ASX mining sector, reported Capital Brief.

What past sell-offs tell miners ahead of the Fed decision

Previously, such extreme figures ended with sharp rebounds. The Kobeissi Letter points to similar situations in March 2024 and December 2024: GDX rose by 21.5% and 15.4% respectively over the next month. The July sell-off followed the same path, but that growth had a clear trigger—the U.S. Treasury bond buyback plan.

Margins also leave room for miners to recover. Newmont, the world's largest gold miner, reported all-in sustaining costs (AISC) of $1,454 per ounce in the third quarter. Gold is trading about $2,530 above this level.

Rates remain a risk: according to CME FedWatch, traders are pricing in a 75.4% chance of a hike in December. Higher rates increase the cost of holding gold, which does not yield interest. Wednesday's decision will be the first test of whether the July scenario will repeat.