Gold Runs Amok!

| July 23, 2014 | 0 Comments

goldGold ran amok in premarket trading yesterday…

The yellow metal traded in a wild $13 swing between $1,303 and $1,316 before setting back into a tight range at $1,307 in regular market trading hours.

What caused the wild early morning action?

US investors were digesting the latest consumer price index (CPI) reading. While the monthly change met analysts’ consensus estimate of a 0.3% rise for June, the year-over-year reading is still sitting at a quite noticeable 2.1%.

Even though this is basically at the Federal Reserve’s 2% target rate, plenty of investors and economists are asserting the recent inflation uptick is the start of a bigger run.

Obviously, we’ll need more inflation data to see if there’s any truth to it…

Until we get it, all we can do is look to the charts for a hint of gold’s future direction.


As you can see, the yellow metal is trading just shy of an important multi-month trend line near $1,350(red line). Since gold ran to test this area on July 10th, only to sell off sharply in the following days, bears will likely have the upper hand for the next few weeks.

It’s not out of the realm of possibility to see gold trade to technical support near $1,275 in the near future.


There is something very interesting occurring in gold miners. In spite of the recent selloff in gold, miners are holding onto their massive June gains quite nicely. In fact, the Market Vectors Gold Miners ETF (GDX) is still trading near early March resistance at $28.

As you’re likely aware, GDX holds a basket of the world’s top gold producers including Goldcorp (GG), Barrick Gold (ABX), and Newmont Mining (NEM).

Take a look…

Market Vectors Gold Miners ETF

So far, miners are holding up nicely in spite of the recent downturn in gold. Whenever miners are outperforming gold, I view it as a constructive sign for the yellow metal in the long run.

In other words, while bears may have the upper hand in the gold market from a technical standpoint right now, their influence may be short-lived.

Bottom line…

Year-over-year inflation readings are still sitting near multi-month highs. That fact, mixed with the outperformance of gold miners versus gold in recent trading, leads me to believe this year’s bullish gold run is far from over.

Until Next Time,

Justin Bennett

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Category: Gold

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.