From Taki Tsaklanos: It is that time of the year where the gold market is trading at an important spot. Gold miners will undergo a very important test in the coming weeks.
Smart investors are focused on a minority of price points. Not every price has a similar importance. Gold miners, for instance, as represented by the GDX ETF, have a very high importance in the 22.50 to 27.00 area. Why? Because that has been a long consolidation area in the past, and it marks the resistance area of the bearish trend in the gold mining sector.
Note that this price level coincides with a level of similar importance in the HUI index, as explained in Buy Gold Mining Stocks? Patience Is Required As A Big Move Is Brewing.
After gold’s retracement since last summer, a small bounce took place in recent weeks. Uncoincidentally, it brought gold miners right at the point of resistance.
The key question is how the gold mining sector will react in the 22.50 to 27.00 area. More importantly, however, is whether they will be able to break through that area.
Gold investors are watching closely what happens in the gold mining space in conjunction with the 100 level in the US Dollar index.
The Market Vectors Gold Miners ETF (NYSE:GDX) was unchanged in premarket trading Friday. Year-to-date, GDX has gained 8.13%, versus a 1.34% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Investing Haven.