The First Signs Of A Gold Reversal

My view:

The first chart shows GDX the gold miners ETF starting to outperform the general market after a 5 month sell off.

If the first resistance level of 20 can be taken out, the second resistance level near 21.5 would be a potential target.

Liquidity is very thin this time of year, so wild swings in both the metal and mining stocks are possible over the next few days.

The second chart shows the relationship between the Dow Jones Industrials and the gold metal ETF GLD.

There are signs that the Dow is tiring and GLD is perking up.

With these facts in mind, we should consider the possibility of a US dollar bull trap set up, that if sprung, would likely drive gold prices higher for some time.  The 104 and 100 levels are key to either invalidate or validate this hypothesis.

Over the next few days we will complete our work on our 2017 gold forecast and outlook for the precious metal.