Gold And Gold Stocks Nearing a Big Move

Gold and especially gold mining stocks rebounded on Wednesday and trended higher into the weekend. This is giving some investors renewed hopes that the bull market that began roughly 18 months ago is about to reassert itself. We cannot know for sure yet but what we can say is precious metals are nearing a big move. Gold and gold stocks have traded in tight ranges which will compress further while volatility indicators approach multi-year lows. This is the setup for a break and then a powerful move with increasing momentum and volatility.
First let’s take a look at Gold. Its weekly bar chart is shown (going back 10 years) with two volatility indicators at the bottom. One is the GVZ contract and one is the average true range (ATR) indicator. The ATR indicator is at a 10-year low while GVZ is near an 8-year low. Gold has tested major resistance ($1300) twice and failed both times. If Gold loses its 2017 uptrend (support is around $1230) then it is susceptible to an accelerated decline with increasing volatility and momentum. On the other hand, if Gold could bust through $1300 and then consolidate around $1350, it could setup that anticipated breakout through $1350-$1375.

This post was published at GoldSeek on 26 June 2017.