Gold miners have been on a roller coaster ride in recent years, with wild swings in prices that can leave investors scratching their heads. Although it is not easy to forecast future trends in the gold mining chart, in general, we want to stay focused on current trends and define those conditions that come with a secular bullish trend. First and foremost, it will be gold spot that will determine when gold miners enter a new phase in their secular bull market. As said, we stick to our bullish gold forecast. However, we also need more detailed gold mining chart readings.
This is how we read the daily gold miners chart embedded in this article.
The dominant chart pattern of the GDX is a long-term bullish reversal. However, as with any chart pattern, it needs to hold to confirm its bullish nature. Let’s take a closer look at the key levels on the chart:
The 61.8% retracement level in red was successfully tested in March, which is a positive sign. The 50% retracement in purple was holding up in 2021, but it gave up in 2022. However, GDX cleared it convincingly in 2023. Currently, GDX is testing the 38.2% retracement level in yellow. If it can break through this level, it would be a bullish signal.
The long-term falling trendline in green is also being tested. It got rejected and resulted in a big downtrend last year in April. If it breaks through this trendline and holds above it, it would be a significant bullish sign.
If GDX succeeds in breaking out, it will be a secular breakout because it will have cleared all key retracement levels in case it moves higher from here. However, this is still an if, and we need to be cautious.
It’s essential to look at the leading indicators, and in this case, gold spot. Gold spot hit an all-time high last week but found resistance. With a triple test of ATH, there is a reasonable probability that gold will not sell off like it did last April, which means a soft pullback only for GDX.
In conclusion, in case gold continues higher, the gold mining space will be on fire. Therefore, if you are considering investing in the gold mining sector, you should look for exposure to the strongest names in the ETF.
We shared the two strongest gold stocks and one very promising gold junior with our Momentum Investing members earlier this week: The ‘Safest’ Gold & Silver Chart Setups.