Jeff Clark's Market Minute

The Longer-Term Outlook for Gold

The stock market wouldn’t be doing its job if it didn’t smack me across the head every once in a while.

I turned modestly bullish on gold stocks late last week. The sector had consolidated long enough that I thought “well, if gold was going to sell off to the $1,290 target I predicted a few months ago, it would have gotten there by now.”

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As soon as I said something nice about the gold sector, the market smacked me down. Gold dropped more than $20 per ounce yesterday. The shiny yellow metal is trading hands for just $1,290 per ounce.

That was my downside target price. It’s the lowest price so far in 2018. And it is a screaming bargain at this level.

Look at this long-term, weekly chart of the price of gold…

This chart is forming an ascending triangle pattern – which is a series of higher lows, with rallies that keep bumping into the same resistance level.

Most of the time, this pattern breaks out to the upside. And if that happens here, then gold could rally up towards the next resistance level at about $1,600.

Of course, this is a long-term chart. It could take a year or more to play out. But I like the way it looks.

Notice also that the various moving averages are stacked in a bullish configuration. The 9-week exponential moving average is above the 20-week EMA. And, the 20-week EMA is above the 50-week moving average. This type of setup supports a longer-term bullish view.

So, as long as gold doesn’t break decisively below the rising support line of the triangle pattern, traders should look for higher gold prices over time.

In other words… If you’ve been waiting for a decent pullback in the price of gold in order to add more exposure to the metal, then Tuesday’s drop was a buying opportunity.

Best regards and good trading,

Jeff Clark

Reader Mailbag

Today, two opposing views of yesterday’s essay, “This Indicator Says Sell Today”…

Yes, but the numbers this morning were very strong! So why would the market roll over now?

– Patrick

I’ve been following you for years, thanks for these updates. I use them in my trading. Got short yesterday and added today. Your viewpoint helps confirm what I see.

– Bob

Thank you, as always, for your thoughtful insights. Keep them coming right here.

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