Gold spiked earlier this spring and has been consolidating at these levels for a few weeks. Consolidations like these are usually phases where weak hands leave and strong hands accumulate positions. What is interesting is the fact gold has managed holding these highs despite most global fear indices, VIX etc, all have been continuing coming off.
Gold is partly a dollar trade, but recent narrative around gold has been more about other risks than purely a dollar trade. Part of the narrative has been the fear factor or maybe call it confusion around what central banks are up to next.
We saw early upticks in volatility in equities yesterday and it is feeding over today as well. Should fear start kicking in for real, we could expect gold to become the fear hedge again.
The longer-term chart is at some resistance levels, but should we take out these levels, there is mostly “vacuum” up to the 1520 level.
The shorter-term chart has been developing some sort of a pennant. Watch for any new high close above recent trading ranges. 1425/1430 is the big resistance level to watch.
Gold miners, GDX, is the “geared” long gold trade. This space has outperformed big since the latest gold move higher commenced. The ETF broke to new levels yesterday and the chart looks unstoppable at the moment. Momentum is very strong.
Chasing the GDX here looks late until you pull out the longer-term chart. There are some important levels here, but this partly “forgotten” space tends to move very big when the narrative goes “full on”. If the gold narrative goes into the second “bull” phase, we are most probably looking for some renewed squeezes in various gold related assets.