The post below analyises gold using the EFT GOLD which tracks spot gold. Another way of looking at the outlook for gold is to consider the gold sector index GXD which is a consolidation of the price performance of a range of listed gold producers. The sector chart below is overlaid with rescaled charts for EVN and PLS. EVN being a very large player in the sector has (not unsuprisingly) a good match with the sector. PLS on the other hand does diverge materially but the important thing to note PLS' price always comes back to that of the sector. Put another way it shows when PLS' price might be overbought or over sold.

What does the sector chart tell me? Gold is probably going to rise strongly for a period of time and see the sector head back above 9,900 It is possible that price could fall in the short term to retest the underlying blue dashed support line which the index has held above for some 7 years. After that retest (should it occur) price could be expected to one again move up strongly.

XGD compare 4June21

21 May 2021

I use GOLD (an ASX listed EFT that mirrors physical gold) for my analysis as the precious metal. I don't subscribe to commodity prices with my trading package and while the price of the EFT is different from that of gold, the patterns price makes should be the same for both.

Gold moved up strongly last week (2.4%) making it the longest and most consistent rally in the precious metal since June to August last year. Gold is still 20% above a line of support the price has held above for nearly 20 years and it is inevitable that at some stage price will fall back to that support - so there is always the chance this rally could evaporate. Price closed at an overhead resistance level on Friday and next week will determine if that resistance turns price down as it has before or (hopefully) the rally has sufficient momentum to break higher.

Gold 21May21

 

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Robert Norman

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