A couple of weeks ago I posted charts of precious metals with their Twitter sentiment indicators. In that post I concluded that “precious metals need a bounce right here or we’re probably seeing the resumption of the longer term down trend.” Gold and gold stocks didn’t get the bounce and subsequently broke back below their 50 day moving averages. This increases the odds that a continuation of the down trend is underway.
There is a silver lining though. Sentiment hasn’t broken down too badly with price. Although the SPDR Gold Shares ETF (GLD) smoothed sentiment broke its uptrend line, it has turned back up at a point that is still confirming the move out of the June lows. This puts GLD back in a position that it once again needs to bounce right here.
Market Vectors Gold Miner Shares ETF (GDX) has a much healthier chart and sentiment pattern. GDX is still holding its uptrend line for price that started with the June lows. Smoothed sentiment barely dipped below its uptrend line and is still fairly positive. GDX needs to hold its short term uptrend line to keep the chart positive.
Unfortunately, Randgold Resources (GOLD) is still in the midst of a consolidation warning and smoothed sentiment is confirming a down trend. The failure at its 200 day moving average has now carried below the 50 dma and the short term uptrend. This doesn’t bode well for GOLD and most likely the other precious metals stocks. To fix this chart I’d like to see GOLD recapture and hold above its 200 dma and clear its consolidation warning.
My conclusion is precious metals are sending mixed signals that are mostly negative. Once again, without a bounce right here the longer term downtrend has most likely reasserted itself.