Gold and Miners About To Face Important Test

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Most of the time gold and the dollar move in opposite directions. However, in the last few weeks the dollar has been rising sharply and gold has really been moving sideways.  Now our inverted dollar diffusion indicator is deeply oversold and that may  provide the price of the yellow metal with an escape hatch as the dollar corrects. However, the GLD really needs to break and hold decisively above the upper area of the trading range at $130 if it is to trigger some primary bull market signals.
gold_price_daily_2011_August_2014

 

The gold shares in the form of the GDX are also in a tight trading range. However, while this ETF has been moving sideways the bullish percentage of its components continues to advance. This presents  a subtle hint that under the surface things are better than the GDX price would have us believe. The indication being that a break above $27.50  is more likely to take place than a drop below the red trendline at $23.

GDX_gold_miners_price_daily_2011_August_2014

 

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