Gold Price Retest Coming

November 11, 2019

Gold and silver stocks have held up decently during the correction in precious metals, which is now in its 3rd month. However, as we mentioned last week, the bugaboo has been the relatively high net speculative position in gold, which has not changed much despite recent weakness in the sector.

Technically gold cracked last week and the downside momentum coupled with the relatively high net spec position argues that gold is headed for a retest of the summer breakout.

Gold closed the week at $1463 with a net speculative position (as a percentage of open interest) of 45.9%.

As the chart below shows, the net speculative position often hit lows at or below 30% during corrections in bull years. Look for gold to test support at $1370 to $1400 as more spec longs cut their long positions.

A retest for gold means a retest for the gold stocks too.

Below we chart GDX and GDXJ.

GDX has a confluence of strong support at $24.50 to $25.00, which was the breakout point. GDXJ has a confluence of strong support in the $34s.

As I touched on last week, the relative strength in the silver stocks (SIL) and the strong breadth in GDX (its advance decline line made a higher high on Oct 31) has been encouraging. Time will tell if these positives remain in place should the sector retest these key support levels.

Pay attention, because the market should provide us with some good, low risk opportunities over the next few weeks. There is one junior producer we have our eyes on buying very soon.

We have been focusing on identifying and accumulating quality juniors with significant upside potential in 2020. To learn the stocks we own and intend to buy that have 3x to 5x potential, consider learning more about our premium service.

*********

Jordan Roy-Byrne, CMT is a Chartered Market Technician and member of the Market Technicians Association. He is the publisher and editor of TheDailyGold Premiuma publication which emphasizes market timing and stock selection, as well as TheDailyGold Global, an add-on service for subscribers which covers global capital markets. He is also the author of the 2015 book, The Coming Renewal of Gold’s Secular Bull Market which is available for free. TheDailyGold.com was recently named one of the top 50 Investment Blogs by DailyReckoning and WalletHub.

24 karat gold is pure elemental gold.

Gold Eagle twitter                Like Gold Eagle on Facebook