Heightened volatility in global financial markets due to increased concern over trade wars has sent traders to the commodities markets seeking shelter. One group of assets that has come into focus over recent days is gold and the related miners. In the paragraphs below, we’ll take a look at several influential charts and try to determine how traders will be looking to position themselves over the weeks or months ahead.
SPDR Gold Shares (GLD)
One of the most popular methods for active traders interested in buying into gold is to look to exchange-traded products such as the SPDR Gold Shares (GLD). This fund is the most widely known and is widely traded by institutional investors for its direct exposure to the physical metal.
Taking a look at the chart, you can see that the price has recently bounced off of the support of its 200-day moving average (red line). This long-term average is commonly used by traders for determining the placement of buy and stop orders. Recent price action clearly shows that the bulls are in control of the momentum, and followers of technical analysis will likely use the breakout above the upper trendline as confirmation of a move higher and protect their long positions by placing a stop-loss order below $118.52 in case of a major pullback. Traders will likely also want to note the bullish crossover between the moving average convergence divergence (MACD) and its signal line as another indicator that is pointing to higher prices.
VanEck Vectors Gold Miners ETF (GDX)
Active traders who want to trade a rise in gold prices often turn to the major mining companies. Given the rise in popularity of exchange-traded funds such as the VanEck Vectors Gold Miners ETF (GDX), it is now possible for retail and institutional investors to gain exposure to a wide group of gold-related miners.
Taking a look at the chart, you can see that the price has drifted toward the support of its 200-day moving average like it did earlier in 2019, and recent strength has many wondering if another sharp move higher is in the cards. Like the chart discussed above, active traders will likely want to pay particularly close attention to GDX because its MACD indicator recently crossed above its signal line, which suggests that the price is headed back toward its 2019 high of $23.70 or beyond.
Barrick Gold Corporation (GOLD)
For traders who want even more targeted exposure to gold mining companies, one popular choice is Barrick Gold Corporation (GOLD) due to its scale and breadth of operations.
Taking a look at the chart, you can see that the price is trading near the support of a clearly defined ascending channel pattern. Followers of technical analysis will likely look to buy as close to the lower support level as possible and then watch for the price to move toward the upper trendline. From a risk-management perspective, current levels are providing traders will clear buy and sell signals with a lucrative amount of upside for the given amount of risk.
The Bottom Line
Heightened geopolitical volatility has acted as the catalyst for many active traders to turn to gold and other precious metals over the past few trading sessions. Based on the patterns described above and the bullish MACD crossovers, it appears as though now could be the ideal time to add exposure to gold and its associated miners.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.