While most investors are focused on solid gains for the S&P 500 and Nasdaq in 2024, it’s worth remembering that gold has nearly matched the performance of equity benchmarks over the course of the year. With stocks facing new headwinds in the new year, gold could be the way to weather this period of market uncertainty. SPDR Gold Stock (GLD), which tracks the price of gold, peaked in late October 2024 and lost more than 8% in value before settling in a range of $235 to $250. While the RSI has been firmly in bullish territory for most of 2024, this key gauge of price momentum spent much of the fourth quarter in a neutral range between 40 and 60. Resistance at $250 and ideally an RSI reading above that range of 60 would signal a breakout of the range pattern with improving momentum. Similar to breakouts in March and August 2024, an initial break above resistance could bring further upside potential to this traditional safe haven. While the gold chart appears to be gearing up for an upside breakout, the real money could be made by investing in gold stocks. Comparing GLD to the VanEck Vectors Gold Miners ETF (GDX) shows that the two ETFs experienced very similar returns before peaking in October 2024. GLD is down about 8% from its October high, while GDX is down more than 22% to its December 2024 low. We can see a clear performance gap between the two series, confirming that gold stocks have significantly underperformed gold over the past three months. Perhaps a “catch-up” trade is coming and gold stocks will close the gap as gold prices strengthen? While GLD is showing a clear consolidation phase, GDX is still in a short-term downtrend with lower highs and lower lows. December’s bucking rally stalled at the 50-day moving average, and the recent decline broke above the 200-day moving average for the first time since early 2024. Indicators have recently confirmed a bullish reversal, with GDX remaining above the 61.8% retracement of the February to October 2024 uptrend. If GDX can extend its recent bullish momentum and regain its 200-day moving average, ideally with a strong momentum reading above 60 on the RSI, this would confirm a new bullish phase for gold stocks. In terms of downside protection, we would consider the chart constructive as long as the price remains above Fibonacci support around $33. Gold Stocks to Watch If gold stocks do follow suit and enter a new bullish phase, identifying the strongest stocks in the group can help us identify the new leaders of the uptrend. Kinross Gold Corp. (KGC), the best performer in the gold space, has recently moved back above its 50-day moving average, potentially putting it on track to retest October highs. The relative strength line at the bottom confirms that while KGC is improving relative to the S&P 500, it is handily outperforming other gold stocks. When in doubt, I always look for the best-performing stocks in the best-performing industry groups. As concerns grow about a more painful correction for stocks in the first quarter, investors looking for other areas of potential strength could do well. Given gold’s resilience during previous bear market phases, and the compelling technical setup outlined today, we believe gold may offer the opportunity to truly outperform. -David Keller, CMT marketmisbehavior.com Disclosure: All opinions expressed by CNBC Pro contributors (own GLD) are theirs alone and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent or affiliates, and may have been previously Disseminated by them on television, radio, the Internet or other media. The above is subject to our Terms and Conditions and Privacy Policy. This content is for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not apply to your particular situation. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. Click here to view the complete disclaimer.
According to the charts, gold is poised to enter a new bullish phase. The following are the levels worth paying attention to | Real Time Headlines
RELATED ARTICLES