With the unemployment rate being announced later this week I have been keeping an eye on the gold markets for clues on a direction. Expectations are that unemployment will increase substantially from the last reported 4.4% to levels that haven't been seen since the 1930's. However, the price of gold hasn't really "outperformed" during the Covid-19 pandemic when compared next to other asset classes which begs the question, will the unemployment numbers really matter?
Looking at the charts gold has been in consolidation since breaking out of the inverse head and shoulders on April 6th. Price has retested and been trading flat since April 14th. The chart below is of the SPDR Gold Trust ETF (GLD). Current support is 156.95 and is a must hold if more upside is to follow.
On the 4-hour chart above, I've highlighted how volume increased on the break of the inverse head and shoulders, and as price returned to retest support volume has settled nicely. MACD confirms this and is beginning to show potential strength in bullish momentum. If GLD breakout, targets should be set towards 174, which conveniently is nearly all-time high resistance.
How confident can we be on this trade? Below is the weekly chart of GDX, a Gold Miners ETF. Here, note the weekly retest of previous resistance at 31. How strong the support remains to be seen, but the strength on the gold miners is undeniable and reaffirms the gold trade to the upside.
Heading into the potentially historic unemployment announcement this Friday, it may be a safe bet to look into gold if you believe in the safe haven narrative. If you are a trader like me, GLD and GDX present opportunities to make 10-20% returns in a short period. Bias: Bullish.
Looking at the charts gold has been in consolidation since breaking out of the inverse head and shoulders on April 6th. Price has retested and been trading flat since April 14th. The chart below is of the SPDR Gold Trust ETF (GLD). Current support is 156.95 and is a must hold if more upside is to follow.
On the 4-hour chart above, I've highlighted how volume increased on the break of the inverse head and shoulders, and as price returned to retest support volume has settled nicely. MACD confirms this and is beginning to show potential strength in bullish momentum. If GLD breakout, targets should be set towards 174, which conveniently is nearly all-time high resistance.
How confident can we be on this trade? Below is the weekly chart of GDX, a Gold Miners ETF. Here, note the weekly retest of previous resistance at 31. How strong the support remains to be seen, but the strength on the gold miners is undeniable and reaffirms the gold trade to the upside.
Heading into the potentially historic unemployment announcement this Friday, it may be a safe bet to look into gold if you believe in the safe haven narrative. If you are a trader like me, GLD and GDX present opportunities to make 10-20% returns in a short period. Bias: Bullish.
