On the back of the June 2019 Fed meeting, gold closed at $1348, just under the recent 52 week highs at $1362. In after-hours trading, Gold decisively broke out to new 5-year highs in a big way. It was a frictionless rocket as the price popped up above resistance and soared over $30. The chart below will update this information at the end of business day tomorrow.
Technicians watching the price of gold have been aware of this line for years. It finally made the big push through. Over the next few weeks, we’ll want to watch and make sure Gold holds the breakout, but this changes the long-term trend for Gold to an uptrend.
The energy for this sudden surge has been building for some time. Early in 2019, Gold moved up to $1350 as the daily chart below shows. Gold corrected into the lows of May but held above the green 200-day moving average. The volume on up days has been accelerating as the black rectangle highlights.
From a momentum perspective, the PPO shows the momentum at a level where it has typically reversed. This big upside jump in price will move that PPO level higher when the chart updates with the new price information. This big bullish thrust may need to consolidate gains with the PPO at stretched levels or it could literally vault to new levels now that the majority of owners are happy with their position as it surges higher. That is what makes it hard to trade as a breakout happens.
Investors in the gold space have lots of choices to invest. They can obviously buy the physical metal or they can buy a number of different ETF’s related to Gold like GLD as an example or a leveraged ETF Like HBU.TO in Canada. The next option is to invest in ETFs that track the gold miners like RING or GDX. There are also leveraged options for tracking the miners with ETF’s like JNUG or NUGT. Investors can also choose to invest in individual company stocks.
Notice to new commodity related asset investors:
It is important to remember that Gold is a commodity and investors in Commodity stocks need to buy low and sell high as commodities range trade for long periods of time. Gold has stalled around $1350 many years in a row, but investors buying near the lows and selling near the highs have been able to make money on the moves. When trading commodity related assets, it is important to take profits and lock in gains. It is also important to use stops to manage risk and exposure.