Gold and Gold related stocks

Friday, 3rd January 2020 11:56 - by Rajan Dhall

Gold has been steadily grinding higher since November and this has come in a period where stock markets in the US have hit all-time highs. 

What does this mean? Do traders and investors really believe in the stock market rally?

The main level to watch on the chart is $1557.10/oz this would be the highest level since April 2013. The main reason for the recent move is geopolitical risks. Overnight the US attacked an army base in Iran killing the Iranian Major General Soleimani.

Interestingly, the move started before the event at the break of the bull flag pattern shown on the chart below. Beyond that, the major target for the bulls is $1920.94/oz the high from 6th Sept 2011. A test of that high could take some time but as a long term trade it seems viable as China also has a big target for their gold reserves.

Below is the correlation chart of the top gold mining stocks in the UK. There are others like GGP and POG on my radar but there would be too many on the chart below if I added them all. 

POLY has been the outperformer and this is because the political issues with Russia abated. Now Centamin and Hochschild are breaking out of ranges to keep an eye on the velocity and volume as a test of former highs could be on the cards if the tensions escalate.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.