The GDX trending higher…
Bullion.Directory precious metals analysis 6 December, 2015
By Christopher Lemieux
Senior Analyst at Bullion.Directory; Twitter @Lemieux_26
Gold mining stocks have been trending higher, along with the overall U.S. equity market, of late. The recent support in gold prices allowed the Market Vectors Gold Miners ETF (GDX) a strong close last week, pushing 15 percent off the November 18 low.
Gold mining stocks really get a pass from traders, and it is still early to determine whether the move will last or not. And, this could depend largely on whether or not the Federal Reserve tightens monetary policy for the first time since 2006. If the Fed does hike rates, gold prices could suffer.
Currently, GDX has been able to close around the 50 percent Fib. retracement on the October 15 high. The daily candle closed near the top of its range on strong volume. The ADX is ticking upwards with a concurrent upward movement in + DMI, and this can garner stronger upside potential.
Conversely, the GDX could see resistance at the 50 percent Fib. level, which also coincides with trend resistance (broken support). A reversal at current levels could send the mining ETF $14.20/00, while deeper price support lies at $13.38.
Further upside momentum would cause the GDX to test the larger, downside trend line between $15.50 and $15.75. If the Fed fails to hike rates in a mere week, the GDX will retest the 200-daily EMA.
Stock pickers could find undervalued gems in the mining space. Meera Shawn, Market Realist, points out that some miners have done quite well this year: Agnico-Eagle Mines (AEM), up 11.2 percent; Centerra Gold (CG), up 31.2 percent and Alacer Gold (ASR), up 8.4 percent versus a 23 percent decline in GDX as a whole. It is important when choosing commodity producers to look for strong balance sheets and low operation costs. This helps producers whether pricing declines.
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