• 518 days Will The ECB Continue To Hike Rates?
  • 518 days Forbes: Aramco Remains Largest Company In The Middle East
  • 520 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 920 days Could Crypto Overtake Traditional Investment?
  • 925 days Americans Still Quitting Jobs At Record Pace
  • 927 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 930 days Is The Dollar Too Strong?
  • 930 days Big Tech Disappoints Investors on Earnings Calls
  • 931 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 933 days China Is Quietly Trying To Distance Itself From Russia
  • 933 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 937 days Crypto Investors Won Big In 2021
  • 937 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 938 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 940 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 941 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 944 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 945 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 945 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 947 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Gold Miners Fail at 200-day Moving Average

Last week we wrote that the precious metals complex had not broken out yet and had more work to do before it could attempt a true breakout. The metals had some more upside and so did the shares. However, the poor performance of the shares this past week could warn of a larger reversal.

We thought the gold miners could rally up to resistance at the 400-day moving average. Instead of pushing a bit higher, their rally reversed course at the 200-day moving average. Note the action since last summer. The miners had a strong rally up to the 400-dma and later recovered to both moving averages when they were quite close in January. This recent rally did not reach the 400-dma and that signals weakness.

GDX Market Vectors Gold Miners NYSE

The weakness in the shares is a warning sign for the entire complex and could also be a signal that the metals have not bottomed yet. Over the past eight months Gold and Silver have essentially traded in a tight range (except for several weeks). Gold has spent most of that period between $1150 and $1225 while Silver has spent most of that time between $15.50 and $17.50. The metals' failure to extend recent strength could signal a move down to the bottom of those ranges and threaten a breakdown.

$GOLD Gold - Spot Price (EOD) CME
Larger Image

Last week we noted that gold miners would only truly breakout (above their 80-week moving averages) if metals were to surpass their January highs.

I'm skeptical metals will do that on this rebound as their relative performance is weak considering the big drop in the US$. The worst is likely over for the miners but if Gold can't reach or takeout its January high then the miners are at risk for remaining in the range they have been in for the past eight months. Until something changes, buying support and oversold conditions works better than chasing strength.

GDX has 12% downside to strong support and 17% downside to its daily low. Be patient and use support to your advantage. If metals are heading to new lows then it would likely create one last chance to buy miners at fire sale prices.

 


Consider learning more about our premium service including our current favorite junior miners which we expect to outperform in the second half of 2015.

 

Back to homepage

Leave a comment

Leave a comment