GDX - It's Correction Time | Benzinga
Source: Clive Maund 04/14/2024
Technical Analyst Clive Maund shares his thoughts on current movements in the gold market.
The turnaround in gold and the precious metals sector on Friday was really dramatic, with gold dropping about $80 from its 11 am EDT peak. This brought out the old explanation about "the powers that be" cratering it by burying it with paper shorts. However, as we can see, there may be a simpler explanation.
Gold had risen a lot by last Friday to become extremely overbought, and it appears that a part of this rise was due to the fear factor relating to Iran attacking Israel and starting World War 3. This has set gold up for a "sell on the news event" where it drops when Iran actually does attack Israel, especially if, as seems to be the case at the time of writing, Iran simply lobs some fireworks at Israel so that "honor is satisfied" with most of these drones or missiles being shot down and those that arrive do little damage. While hostilities may continue at a low-key level, it appears that Iran is behaving with some restraint in order to avoid inciting intervention by the U.S., which is Israel's giant henchman.
To answer the question of where gold and the PM sector generally are headed we are probably better off using the language of the market itself and seeing what the charts have to say.
The prediction in the last gold market update posted on March 16 turned out to be correct, as the following chart from that update shows, even if it took a little longer to get moving than expected.
So we will now look at gold's latest 3-month chart to see what happened and, more importantly, what it portends for the future.
Before going any further, it should be pointed out that because the last prediction was correct, it doesn't mean that today's will be.
As we can see, after the last update was posted, gold did indeed ...