Gold Stocks Forming Bullish Consolidation

Gold and gold stocks especially continue to shrug off bits and pieces of bad news.

No escalation in the trade war? The selloff lasted one day and the sector rebounded strongly the following day.

Strong headline jobs number? Again, the weakness was a buying opportunity.

This past week there was more.

The June CPI report came in hotter than expected, which could mitigate the degree the Fed eases in the future. Also, bond yields in the US have risen the entire week.

No dice.

Gold closed the week at $1412/oz while the gold stocks closed just inches from new highs on the daily charts.

Turning to the technicals of the gold stocks, we see both underlying and relative strength.

Nearly 95% of the large miners closed above the 200-day moving average. Meanwhile GDX relative to both the S&P 500 and Gold is above a rising 200-day moving average. The GDX to Gold ratio is at a 2-year high while the GDX to S&P 500 ratio is very close to a new 52-week high.

GDX w/ Indicators

GDXJ is lagging GDX a bit but it is coming around.

90% of the ETF closed above the 200-day moving average. That is the highest reading in nearly three years.

GDXJ relative to the S&P and Gold has turned bullish and is holding above upward sloping 200-day moving averages.

GDXJ w/ Indicators

The immediate upside targets for GDX and GDXJ are GDX $27.50 and GDXJ $37.50. The next level of targets would be GDX $30 and GDXJ $41.

Gold has endured some selling in the $1420-$1425/oz range but has remained bid around $1400/oz. A daily close above $1420/oz would remove much of the resistance from here to the low $1500s.