Gold & gold stocks face multi-year resistance

The precious metals sector has reached an interesting intersection. After a great recovery, gold and the largest and most important gold mining ETF, the GDX, met multi-year resistance. Gold was able to peak before the $ 1,700 corona crisis and was trading at $ 1,789 before the price went down. From 2011 to 2012, gold peaked three times at $ 1,800 before plummeting to $ 1,200.The GDX is in a more interesting position. He was able to recover 100% of the corona crash, but is now back with a resistance of several years. Below we plot the daily charts. The GDX (top) has withdrawn from its 7-year resistance, while Gold (bottom) has withdrawn from its 8-year resistance.


Focus on GDX

Let’s focus on the GDX because the next breakout there should be more significant for the whole sector. The recovery in gold stocks was historic, but there were some precursors (2001, 2008, 2016). 2008 is the best comparison for price developments before and during the recovery.We plot the daily chart of the GDX, which highlights how it was traded during the financial crisis. Pay particular attention to price movements after confirming the low at the end of November 2008.The rally that followed the November 2008 low found initial resistance at the 50-day moving average. The GDX naturally rose higher. Note that the next correction formed a bottom with a rising 50-day moving average.