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Gold’s CONFIRMED Breakout and Its Implications - The Globe and Mail

Yes, gold price confirmed its breakout – in daily closing price terms. Yes, it is important.

At the moment of writing these words, gold price is trading at about $2,161 – it’s new all-time highs in nominal terms, which is slightly higher than the late-2023 high. Gold price is trying to stay above this level, and while it’s been successful so far, the extremely overbought RSI suggests that it won’t stay as high for long. Ct Room Door

Gold’s CONFIRMED Breakout and Its Implications - The Globe and Mail

Gold is already after a confirmed breakout to new highs. Yesterday was the fourth consecutive daily close above the late-2023 highs (I marked the early-December one, but it was also the case with the late-December one). 

A confirmed breakout opens the door to higher prices, and since it was a breakout to new all-time highs, gold could move much higher in the medium term.

We see the same thing in the GLD ETF and while focusing on the 2022 top.

Generally, three daily closes are needed to confirm a breakout and we saw more than that. The breakout was confirmed, and the implications are bullish. 

But those are not the only facts that are present right now.

It’s also true that gold price is extremely overbought – the RSI based on the GLD ETF is almost as overbought as it was at the 2022 top. After that high, gold price declined for hundreds of dollars.

It’s also true that mining stocks are underperforming gold and the rally that we saw in gold was not even similarly big in case of silver. Nothing special happened in platinum nor palladium. So, we don’t have the bullish confirmations here.

Please just look at the long-term HUI Index chart below and see the recent rally’s size.

Barely noticeable, right? Gold – the metal those mining companies produce and sell just moved to new all-time highs. Why are the miners’ prices not soaring?

Why is this rally pretty much invisible from the long-term point of view, and why are gold stocks so low compared to their own all-time (2011) high? Those are extremely bearish signs for the precious metals market. 

We have the USD Index that’s likely to move higher in the medium term, and we have stock market that is extremely overbought, and we all remember what happened to the prices of gold, silver, and mining stocks when stocks plunged in 2020 or 2008.

The USDX is close to its recent intraday lows as well as its 50-day moving average. It’s also close to the levels that stopped its decline during the August 2023 correction. It seems that it can turn up any day or hour now.

Stocks moved below their late-Feb high recently and while they are trying to get back above it, the fact that they finally did move below the said high already makes the current situation different.

Was that the final top for stocks? If so, it could have been the case that gold (and bitcoin, which soared recently as well) we pushed higher on the wave of the overall dovish and bullish sentiment.

And as stocks move lower, gold might plunge as well.

All right, so what is gold likely to do now?

It’s extremely overbought, so it’s likely to decline – regardless of the breakout and the fact that the medium-term outlook for gold might have just changed to bullish.

Why? Because even if it is the case that gold is going to soar substantially in the following months – despite everything happening on other markets – it’s still likely to correct to the previous highs and verify them as support. Even in the bullish scenario.

And then the real test will take place. Will gold really be able to hold above the previous highs in terms of the closing prices?

If it does, it might be off to new highs shortly thereafter. If it doesn’t, it’s a long way down from there.

The above creates not one, but two major trading opportunities (one clear, and one will depend on the result of gold’s verification), and I’m discussing them both in today’s Gold Trading Alert. I’m also explaining the possibility of seeing a big disconnect within the precious metals sector. Times are changing, and you’ll likely thank yourself for being prepared for those changes. I encourage you to join my subscribers and get more details today, especially that for new subscribers, the first week is free.

Przemyslaw K. Radomski, CFA Founder, Editor-in-chief

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© Copyright 2024 The Globe and Mail Inc. All rights reserved.

Andrew Saunders, President and CEO

Yes, gold price confirmed its breakout – in daily closing price terms. Yes, it is important.

At the moment of writing these words, gold price is trading at about $2,161 – it’s new all-time highs in nominal terms, which is slightly higher than the late-2023 high. Gold price is trying to stay above this level, and while it’s been successful so far, the extremely overbought RSI suggests that it won’t stay as high for long.

Gold is already after a confirmed breakout to new highs. Yesterday was the fourth consecutive daily close above the late-2023 highs (I marked the early-December one, but it was also the case with the late-December one). 

A confirmed breakout opens the door to higher prices, and since it was a breakout to new all-time highs, gold could move much higher in the medium term.

We see the same thing in the GLD ETF and while focusing on the 2022 top.

Generally, three daily closes are needed to confirm a breakout and we saw more than that. The breakout was confirmed, and the implications are bullish. 

But those are not the only facts that are present right now.

It’s also true that gold price is extremely overbought – the RSI based on the GLD ETF is almost as overbought as it was at the 2022 top. After that high, gold price declined for hundreds of dollars.

It’s also true that mining stocks are underperforming gold and the rally that we saw in gold was not even similarly big in case of silver. Nothing special happened in platinum nor palladium. So, we don’t have the bullish confirmations here.

Please just look at the long-term HUI Index chart below and see the recent rally’s size.

Barely noticeable, right? Gold – the metal those mining companies produce and sell just moved to new all-time highs. Why are the miners’ prices not soaring?

Why is this rally pretty much invisible from the long-term point of view, and why are gold stocks so low compared to their own all-time (2011) high? Those are extremely bearish signs for the precious metals market. 

We have the USD Index that’s likely to move higher in the medium term, and we have stock market that is extremely overbought, and we all remember what happened to the prices of gold, silver, and mining stocks when stocks plunged in 2020 or 2008.

The USDX is close to its recent intraday lows as well as its 50-day moving average. It’s also close to the levels that stopped its decline during the August 2023 correction. It seems that it can turn up any day or hour now.

Stocks moved below their late-Feb high recently and while they are trying to get back above it, the fact that they finally did move below the said high already makes the current situation different.

Was that the final top for stocks? If so, it could have been the case that gold (and bitcoin, which soared recently as well) we pushed higher on the wave of the overall dovish and bullish sentiment.

And as stocks move lower, gold might plunge as well.

All right, so what is gold likely to do now?

It’s extremely overbought, so it’s likely to decline – regardless of the breakout and the fact that the medium-term outlook for gold might have just changed to bullish.

Why? Because even if it is the case that gold is going to soar substantially in the following months – despite everything happening on other markets – it’s still likely to correct to the previous highs and verify them as support. Even in the bullish scenario.

And then the real test will take place. Will gold really be able to hold above the previous highs in terms of the closing prices?

If it does, it might be off to new highs shortly thereafter. If it doesn’t, it’s a long way down from there.

The above creates not one, but two major trading opportunities (one clear, and one will depend on the result of gold’s verification), and I’m discussing them both in today’s Gold Trading Alert. I’m also explaining the possibility of seeing a big disconnect within the precious metals sector. Times are changing, and you’ll likely thank yourself for being prepared for those changes. I encourage you to join my subscribers and get more details today, especially that for new subscribers, the first week is free.

Przemyslaw K. Radomski, CFA Founder, Editor-in-chief

David Milstead is a reporter for The Globe and Mail. A business journalist since 1994, David began writing for The Globe and Mail in 2009.

David is an Oberlin College graduate, and passed the Level I exam in the Chartered Financial Analyst program in December 2007. He has also worked for the the Rocky Mountain News in Denver and the Wall Street Journal.

John Heinzl has been writing about business and investing since 1990. A native of Hamilton, he earned a master's degree from the University of Western Ontario's Graduate School of Journalism and completed the Canadian Securities Course with honours. His Yield Hog columns explore the world of dividend stocks and other income-producing securities, and his explanatory Investor Clinic columns aim to inform and educate investors who want to take control of their money. He also writes the irreverent Stars and Dogs feature that appears every Saturday in Report on Business.","books":[],"podcasts":[],"education":[],"awards":[],"image":"https://s3.amazonaws.com/arc-authors/tgam/120f635e-1e0b-4dbf-a004-aa502671c822.png","type":"author","location":"Toronto","expertise":"Dividend stocks, portfolio management, personal finance","author_type":"Freelance","custom_tgam_year_start":"1990","last_updated_date":"2021-01-30T17:57:50.985Z","status":true}}}]},"promo_items":{"basic":{"url":"https://cloudfront-us-east-1.images.arcpublishing.com/tgam/PP3OBBM67VDJLIKRRMGHORF6DY.jpg"}}},{"_id":"MXPQVBG4FVEF3ORK6VRV6QJKEQ","label":{},"type":"story","subtype":"none","last_updated_date":"2024-04-08T19:57:03.914Z","canonical_url":"/investing/article-us-stocks-lofty-valuations-in-spotlight-as-earnings-season-nears/","headlines":{"basic":"U.S. stocks’ lofty valuations in spotlight as earnings season nears","meta_title":"","mobile":"","native":"","print":"","tablet":"","web":""},"taxonomy":{"primary_site":{"_id":"/investing","type":"site","version":"0.5.8","name":"Globe Investor","path":"/investing","parent_id":"/","additional_properties":{"original":{"_id":"/investing","navigation":{"nav_title":"Investing","nav_display":"true","nav_url":"/investing"},"_admin":{"alias_ids":["/globe-investor","/investing"]},"metadata":{"description":"Globe Investor offers the most current and up-to-date information on stocks and markets from The Globe and Mail. 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","url":"/authors/james-bradshaw/","slug":"james-bradshaw","social_links":[{"site":"email","url":"jbradshaw@globeandmail.com"},{"site":"facebook","url":"https://www.facebook.com/JamesBradshawGlobe/"},{"site":"twitter","url":"jembradshaw"},{"site":"linkedin","url":"https://ca.linkedin.com/in/jembradshaw"}],"socialLinks":[{"site":"email","url":"jbradshaw@globeandmail.com","deprecated":true,"deprecation_msg":"Please use social_links."},{"site":"facebook","url":"https://www.facebook.com/JamesBradshawGlobe/","deprecated":true,"deprecation_msg":"Please use social_links."},{"site":"twitter","url":"jembradshaw","deprecated":true,"deprecation_msg":"Please use social_links."},{"site":"linkedin","url":"https://ca.linkedin.com/in/jembradshaw","deprecated":true,"deprecation_msg":"Please use social_links."}],"additional_properties":{"original":{"_id":"638362","lastName":"Bradshaw","bio_page":"/authors/james-bradshaw/","image":"https://s3.amazonaws.com/arc-authors/tgam/1c012ac0-1f48-409e-a4a0-f50c9f557e58.jpg","altByline":"James Bradshaw","twitter":"jembradshaw","byline":"James Bradshaw","bio":"James Bradshaw is the Banking Reporter for The Globe and Mail's Report on Business. 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James Bradshaw is the Institutional Investing Reporter for the Report on Business, based in Toronto. In that role, he is responsible for coverage of Canada's largest pension plans, private equity firms and alternative asset managers, which collectively control trillions of dollars of investments ranging from real estate to public infrastructure.

Previously, he spent six years as The Globe's banking reporter, covering the financial services sector, including the largest banks, fintechs and financial regulators.

Since joining the Globe and Mail in 2007, James has covered media, higher education, arts and cultural policy, and national news. He has occasionally written Editorials as well.

He has won a SABEW Canada Best in Business Award and the Edward Goff Penny Memorial Prize.

Jameson Berkow is the capital markets reporter for The Globe and Mail. He joined The Globe in November, 2018, to cover the economic implications of cannabis legalization. He left in early 2020 to start an entrepreneurship magazine and rejoined The Globe in early 2022 to cover financial regulation and governance for Globe Advisor.

Gold’s CONFIRMED Breakout and Its Implications - The Globe and Mail

Automatic Hospital Sliding Door With more than a decade of experience in financial journalism, Jameson was most recently the senior reporter for BNN Bloomberg (formerly the Business News Network), where he led live daily coverage of major business news from the television station’s Toronto headquarters. He previously worked as the station’s Western Canada bureau chief based in Calgary, where his reporting on pipeline politics and the 2014 oil price crash was nominated for numerous awards.\nHis series of reports from Fort McMurray, Alberta in 2015 was a finalist for the RTDNA Dave Rogers Award. Prior to his work in television, Jameson was the technology reporter for the Financial Post in Toronto, where he created and hosted the FP Tech Desk podcast and authored the weekly Startup Spo