Gold’s Sudden, Newfound Relative Strength


Three weeks ago we discussed how Gold needed to perform considering the US$ index was likely to bounce due to an oversold condition and extreme bearish sentiment.

We wrote: “Simply put, Gold will have to prove itself in real terms if it is going to hold its ground or breakout as the US$ begins a likely bounce.”

The US$ index has enjoyed only a slight rebound but Gold has maintained its 2017 US$ weakness induced gains because of its strong relative performance. Below we plot the daily line chart of Gold and a number of ratios: Gold against foreign currencies (Gold/FC), Gold against Equities and Gold against Bonds. Since the July low, Gold has showed good nominal and relative performance.

The key has been the strong rebound in Gold/FC and the breakout in Gold/Equities. Gold/FC has broken above two trendlines and is now testing its 200-day moving average. Meanwhile, Gold/Equities has broken above one trendline and has regained its 200-day moving average. It would be very bullish for Gold if Gold/FC pushed through its 200-day moving average while Gold/Equities pushed above trendline 2. Those moves would likely accompany a Gold breakout through $1300/oz but more importantly, they would put Gold in a position of trading above its 200-day moving average in nominal terms and against the major asset classes (stocks, bonds, currencies).

Although Gold failed to break above $1300/oz today (Friday), it remains in position to do so because of its renewed strength in real terms. As long as the US$ index does not rally hard, we expect Gold to break above $1300 and reach $1375. The gold stocks as a group have been lagging recently but in the event of a Gold breakout, we foresee significant upside potential as the group could play catch up. Consider learning more about our premium service including our favorite junior exploration companies.

Jordan Roy-Byrne CMT, MFTA
Jordan@TheDailyGold.com

Jordan Roy-Byrne

Jordan Roy-Byrne

Contributing Editor

Email: jordan[at]TheDailyGold.com

Jordan on Google+Google+

Jordan Roy-Byrne, CMT is a Chartered Market Technician and member of the Market Technicians Association. He is the publisher and editor of TheDailyGold Premium, a publication which emphasizes market timing and stock selection for the sophisticated investor, as well as TheDailyGold Global, an add-on service for subscribers which covers global capital markets.

Jordan’s work has been featured in CNBC, Barrons, Financial Times Alphaville, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan has been a speaker at PDAC, Cambridge House and Hard Assets conferences. TheDailyGold.com was recently named one of the top 50 Investment Blogs by DailyReckoning. Jordan earned a degree in General Studies from the University of Washington with a concentration in International Economic Development.

Feedback

MOST ACTIVE GOLD STOCKS

Daily Gainers

Riedel Resources LimitedRIE.AX+25.00%
Rhyolite ResourcesRYE.V+23.08%
Forsys Metals Corp.FSY.TO+19.23%
Hawthorn ResourcesHAW.AX+17.46%
Centaurus Metals LimitedCTM.AX+16.67%
Queensland BauxiteQBL.AX+13.79%
Abitex Resources Inc.ABE.V+13.43%
Argonaut ResourcesARE.AX+13.04%
Goldquest Mining Corp.GQC.V+12.96%
Jaguar Mining Inc.JAG.TO+12.90%
CONNECT WITH US

  Tweets

Tweet with hash tag #miningfeeds or @miningfeeds and your tweets will be displayed across this site.

If you would like to receive our free newsletter via email, simply enter your email address below & click subscribe.


© 2017 MiningFeeds.com. All rights reserved.
(This site is formed from a merger of Mining Nerds and Highgrade Review.)