From the desk of Tom Bruni @BruniCharting
We’ve been fading gold since September for a variety of reasons, but primarily due to the overwhelming amount of selling being done by Commercial Hedgers.
While many of those conditions still exist our risk management for this thesis has always been Gold closing above 1,600.
This week we’re getting that, so let’s take a look at what’s next and how we’re taking advantage of it.
Here’s Gold priced in US Dollars breaking out above 1,560-1,600 on the weekly chart as momentum gets overbought. As long as prices are above that range of support, we’ve got defined risk on the long side and can look for a retest of all-time highs over the coming quarters and years.
Click on chart to enlarge view.
From a stock market perspective, the cleanest setup remains in the Junior Gold Miners (GDXJ) which is bumping up against resistance at 43. If prices can get decisively above that level then the path of least resistance is higher with a target at the 2016 highs of 52.50.
Precious Metals as a group continue to work, but given the intermarket factors that remain divergent from prices (i.e. Silver/Gold ratio) we wanted to ensure our risk was well-defined before getting involved again. It is now and we can see how things develop in the coming weeks and months.
Thanks for reading and please let us know if you have any questions!