Gold Update: 20 January 2014

Gold may be exiting its 2.5 year bear market. Gold bottomed in June 2013 at $1,179, rallied +22% and then declined to re-test the lows set over the Summer. So far, that re-test has been successful with gold bottoming in December 2013 at $1,181 and then rallying into the New Year. Gold is currently trading at $1,250.

Notable in the chart below, we can see that, in addition to the successful re-test of the lows, the momentum of the decline has also slowed (MACD), indicating that there are few sellers left to sell. The longer gold can hold above $1,179, the stronger the case that the bull market is about to resume. Of course, we need to see gold making higher highs in the months ahead to confirm the bullish case, but the current setup is a solid start. Also, the gold mining stocks are confirming this bullish move with the majors +11% YTD and the riskier junior explorers +19% YTD.

 

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