Can the strong bullish trend of gold mining stocks continue? The non-farm payroll data tonight will determine the outcome.

As the August nonfarm payroll report is about to be released in the United States, investors who are betting on the strong rise of gold mining stocks are facing a test. As of July this year, the VanEck Gold Mining ETF has continued to experience outflows of funds. The reason is that investors are concerned that the resilience of the US economy will end the record-breaking rise in gold prices and choose to take profits. However, weak US nonfarm payroll data for July and pressure from US President Trump have almost locked in expectations for a rate cut from the Federal Reserve later this month. With worsening economic uncertainty and rising rate cut expectations, the safe-haven properties of gold are attracting investors to increase their bets. This has prompted investors to pour $531 million into the VanEck Gold Mining ETF last month, marking the highest record since November 2023. Data shows that the VanEck Gold Mining ETF has risen by approximately 90% so far this year, with many of its constituent companies seeing triple-digit increases in their stock prices. Newmont Mining (NEM.US), the only gold mining company in the S&P 500 index, has doubled its stock price since the beginning of the year, becoming the third best-performing constituent stock in the index. Ryan McIntyre, Senior Managing Partner and Senior Portfolio Manager at Sprott Inc., said that this shift in investment preference also represents a leveraged bet on the prospects of gold to some extent. He pointed out that for every 1% increase in the price of gold, gold mining stocks often rise by 2%. This point is confirmed in the price movements of the VanEck Gold Mining ETF and many of its constituent stocks. Gold and silver prices have both risen by at least 33% so far this year, while Barrick Gold Corporation (GOLD.US) stock in the ETF has risen by 75%, Agnico Eagle Mines stock has risen by 90%, and Discovery Silver Corp. stock has skyrocketed by about 500%. Gold mining stocks outperform the S&P 500 index J.P. Morgan analysts predict that as the Federal Reserve's rate cut attracts more investors to buy commodity ETFs tracking gold, the upward trend in gold prices will continue. This forces funds to purchase underlying assets, further boosting demand. Analysts also warned that Trump's pressure on the central bank would have a similar effect. Analysts said, "We believe that any weakening of the Federal Reserve's independence could have a significant long-term impact on gold prices." Inflows into gold-related ETFs accelerated significantly at the end of August. According to a report released by BMO Capital Markets analyst Helen Amos on Tuesday, investors bought $3.9 billion worth of gold-related ETFs last week, marking the "strongest single-week inflow" since Trump announced comprehensive tariffs in April. Dean Curnutt, CEO and founder of Macro Risk Advisors, said on Tuesday, "You have to find assets that are different from the super large-cap tech stocks." He added that gold has multiple tailwinds, including continued buying by global central banks the total amount of gold held by central banks worldwide already exceeds US Treasury bonds. However, investment strategist Jim Paulsen warned that investors should be aware that if the macroeconomic environment changes, the market may rapidly sell off gold mining stocks. Another risk is that gold mining stocks may not provide a solid hedge for market risks like gold itself, as the fate of mining companies is also influenced by economic conditions. Ryan McIntyre said that investors are currently buying both physical gold and mining stocks. Hugo Ste-Marie, Director of Portfolio and Quantitative Strategy at Bank of Nova Scotia, said, "With rising economic policy uncertainties and the possibility of a lower US dollar index, the price of gold should continue to have strong support. There is still greater upside for gold stocks."