Gold Miner ETF at Long-Term Resistance as Optimism Spreads
Gold and gold miners have been some of the go-to names in these days of coronavirus and cratering GDP growth.
The
GDX
has rallied sharply in the last month as investors look for firehoses of liquidity to boost precious metals. But that’s placed it at risk of conditions improving. What if the crisis starts to lift? What happens to gold if investors rotate back to cyclical parts of the market like banks and industrials?
The price chart may be reflecting those possibilities because GDX has been unable to close above $31. (This has been a key resistance area since running back to April 2013.) This week had another failure at that level – despite
XAUUSD
inching to a new high.
The resistance around $31 is now a potential risk-management level. GDX also has liquid options, creating the potential for income traders to sell credit spreads.
Overall, a lot of bullish news is priced into GDX at this level. But that also creates downside risk in price if conditions improve on Main Street.
The
GDX
has rallied sharply in the last month as investors look for firehoses of liquidity to boost precious metals. But that’s placed it at risk of conditions improving. What if the crisis starts to lift? What happens to gold if investors rotate back to cyclical parts of the market like banks and industrials? The price chart may be reflecting those possibilities because GDX has been unable to close above $31. (This has been a key resistance area since running back to April 2013.) This week had another failure at that level – despite
XAUUSD
inching to a new high. The resistance around $31 is now a potential risk-management level. GDX also has liquid options, creating the potential for income traders to sell credit spreads.
Overall, a lot of bullish news is priced into GDX at this level. But that also creates downside risk in price if conditions improve on Main Street.