• 14 hours The Fed Is Printing Money At Unprecedented Levels
  • 15 hours How Is The Real Estate Market Handling COVID-19?
  • 16 hours Gold Flat As Markets Await Fed Chair Speech
  • 17 hours What Is Day Trading And Is It Right For You?
  • 18 hours Energy CEOs See Big Payouts Despite Oil Price Crash
  • 19 hours Saudi Arabia Is Fighting A War On Two Fronts
  • 20 hours 40 Million Jobless As Pandemic Fuels Economic Collapse
  • 21 hours What Do India's Latest Reforms Mean For Its Coal Industry?
  • 22 hours Copper Glut Continues To Grow
  • 2 days How A Pandemic Made Americans Better Workers
  • 2 days The Trillion Dollar Space Race Crosses Another Milestone
  • 2 days Gold Prices Fall As Stock Market Sentiment Turns Positive
  • 3 days Conspiracy Theories Set Tone For 5G Cold War
  • 3 days Working From Home Will Transform The Energy Industry
  • 3 days The Multi-Billion Dollar Race For A Vaccine
  • 3 days Can Domestic Tourism Bolster Emerging Economies?
  • 3 days Australia Considers $100 Million Investment To Kickstart Mining Industry
  • 3 days Has Re-Opening The Economy Been Successful?
  • 3 days Gold Miners Still Have Massive Upside Potential
  • 3 days The Risky World Of Oil Hedging
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  1. Home
  2. Markets
  3. Other

Gold and Gold Stocks Hit Upside Targets. Now What?

The precious metals sector has reached the upside targets we've written about since the start of 2017. Gold has touched almost $1250/oz ($1246/oz high) while GDXJ exceeded our $41 target and GDX nearly reached $26. The glass half empty case is the sector is now at strong resistance levels and any immediate upside will be difficult to sustain. On the other hand, the gold stocks are showing the internal (strong advance/decline line) and relative strength (leadership against Gold) that bodes for additional gains. There may be some more upside potential but the risk of a medium term correction looms in the background.

The image below shows the weekly bar charts for GDX and GDXJ. If the miners can make a weekly close above the strong red lines then there is a chance the rally can come very close to the 2016 highs before the next sustained correction. For GDX that is a close above $27.24 and for GDXJ that is a close above $42.60. It is also quite possible that GDX peaks at $27 while GDXJ, given its relative strength exceeds $42.60 temporarily.

VanEck Vectors Gold Miners ETF and Junior Gold Miners ETF Weekly Chart

The hourly bar charts (shown below) provide better insight for the next week or two. The miners appear to be digesting the strong gains achieved since the end of January. Look for another week or two of consolidation and digestion. Ultimately, if the miners make a daily close above recent highs then the upside targets are +$46 for GDXJ and +$28 for GDX. We are currently more confident in GDXJ than GDX.

VanEck Vectors Gold Miners ETF and Junior Gold Miners ETF 60-Minute Chart

Turning to Gold, it has lagged the miners but nearly reached $1250/oz this week. It closed the week at $1236/oz. There is a strong confluence of resistance at $1250/oz and we note the 200-day moving average at $1266/oz. If the rally has a bit more time left then Gold has a good shot to reach $1266/oz. Also, as we noted a few weeks ago, Gold's performance against the other asset classes will help inform us if Gold can hold onto recent gains or if it's headed for a big retracement. The bullish scenario would entail Gold maintaining recent gains against foreign currencies and bonds while showing strength against global equities.

Weekly Gold Chart

Gold and gold stocks appear to have a bit more upside potential but the medium term outlook urges caution and patience. The miners and Gold are nearing strong resistance at a time when the US Dollar index could be firming around 100. Regardless of where and when this rebound ends, the precious metals sector could be poised for a big move higher following the next medium term correction or consolidation.

 


For professional guidance in riding this new bull market, consider learning more about our premium service including our current favorite junior miners.

 

Back to homepage

Leave a comment

Leave a comment