Gold Struggles Beneath Major Resistance
After once again teasing its proponents, Gold appears to be tracing out a short term ROUNDED TOP pattern. If it completes the pattern, GLD is likely to return to retest its support near last summer’s lows.
The case for Gold continues to strengthen from a fundamental standpoint, but its price action cannot overcome MAJOR Resistance. “Golden Opportunities”. (https://markonomics101.com/2019/03/26/golden-opportunities/).
The Big Picture for Gold, (on the left) is much more encouraging. Gold is tracing out a MASSIVE 6 year ROUNDED BOTTOM pattern with Major resistance at $1,380. Gold has been turned back by this level several times over the last few years and appears to have yet again, fallen short.
The short term topping pattern above is troubling, but the long term very strong support should keep GOLD from falling much lower than $1,200.
Gold’s recent loss of luster is confirmed by the trading behavior in mining stocks and other metals, especially Silver.
Gold’s Short Term Top Confirmed By Miners and Silver
The charts above show the last year for the Gold Miner’s Index (HUI) and Silver ETF (SLV). Both are forming short term topping patterns to confirm the likelihood of a bona fide reversal in GOLD.
As we have iterated many times, the clearing of MAJOR resistance for GOLD at $1,380 per ounce is mandatory for a sustained tradable rally. At some point, the 6 year ROUNDED BOTTOM will likely be followed by a significant rally, but all the necessary ingredients are not currently present.
Gold’s Value As a Hedge
Even though the long awaited BULL Market in Gold is not yet upon us, it still belongs as a small portion of most portfolios. Gold is one of the best hedges against financial crises and the ultra long- term depreciation in the purchasing power of the US Dollar. For now, those risks are subdued.
There are still a plethora of opportunities in the current Bull Market of 2019 such as the ones discussed here. “A Gusher of Opportunities”. (https://markonomics101.com/2019/04/11/a-gusher-of-opportunities/).
Precious Metals will have their day, but not today.
Be Informed, Not Misled!