Gold has enjoyed quite a nice run lately. International gold is up from 1305 on Feb 14 to close in on 1345 this morning. That’s quite a pop from such an outdated barbarous relic. While some think traders are puzzled about the run-up, talking heads are tripping over their tongues trying to explain this run-up, citing everything from Brexit to central bank gold buying. Of course,
none of this is new-news, so why didn’t gold run up sooner?
But let’s stick to reality. The run-up in international prices means that GLD, our trading proxy for gold, rose from 123.31 to 126.70 in this morning’s trading.
But is there a possible speed bump in the road ahead? Let’s look at the 3-month chat.
Yep, that’s a nice looking run-up there. But look down below at the RSI. The RSI is entering “heavily overbought” territory. Meaning we may see a slowdown in the run-up soon. Doesn’t necessarily mean the run is over, just that buyers may be getting tired and we might see the run slow down or pause, if not reverse.
Of course, RSI is not a perfect indicator – no indicator is perfect or we’d all use it! But it has been very useful in recent gold moves, so we’ll be keeping an eye on it.
The Gold Enthusiast
DISCLAIMER: The author holds no positions in any mentioned securities. He is long the gold mining sector with small, non-market-moving positions in NUGT, JNUG, a few junior mining stocks, and some covered calls in NUGT, and may trade any of these in the next 48 hours.
About the Author: Mike Hammer
For 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading GroupMore...