In September, bloggers from The Short Side of Long have predicted a double bottom for global equities, as well as a decently high probability that gold might recover further. Today their thinking seems to be on track, as the sector has seen decent gains over the last two weeks:
"Recent price action is becoming more and more constructive with Gold, Silver and Junior Gold Miners all pushing against their downtrend lines. With a breakout now becoming a possibility, Gold traders seem to be anticipating (or speculating) that FOMC won’t rise rates in 2015."
Looking at the both charts above, three out of the four major assets within the Precious Metals sector have broken out from their downtrends (only GDX lags). But from a technical view, that doesn’t necessarily indicate more gains ahead, as another resistance looms just above. Gold, Silver and various PMs mining gauges are currently all pressing against their 200 day moving averages.
On the one hand, bears will make a conclusion that failure to
break out above this significant pivot point will most likely demonstrate the
end of another dead cat bounce.
On the other hand, bulls are
pointing to Gold Mining Exploration Index, the most
speculative of all mining juniors, which has recently broken out above
its 200 day moving average for the first time in a year.
It could be a leading indicator gold bugs have been looking for, however, only time will show for sure. Bloggers advise investors to eye the price action in the upcoming days and weeks.
