Admittedly, this article is addressing traders with a short to medium term horizon. We believe an interesting opportunity is arising to pick strong miners. Our argument is based on the gold chart and an important trendline we have noticed.
Spot gold is shown on the first chart. The interesting indicator is the RSI, at the top, with a reading of 37 currently. It also shows that gold was oversold (red circle) a month ago. Meantime, spot gold has come down and is currently at an appealing level. An RSI reading of 40 in an uptrend is mostly a buying opportunity.
The gold futures chart shows an even more interesting evolution. As the next chart shows, gold futures bounced strongly right at the ascending trendline. That coincides with the RSI 40 reading in spot gold.
Traders should watch this price level very closely. It is mandatory for gold bulls that $1200 spot gold is not breached.
The most appealing opportunities are currently in the gold mining complex. Some miners in the sector are holding up very well. This outperformance is not widespread though, so stock picking is crucial. The last chart gives an idea of how strong some miners are performing currently. Note how these miners are trading right at their crucial moving averages. A breakout or breakdown signal will be linked to the price action around those moving averages.