While most investors were focused on the solid uptrend in the S&P 500 and Nasdaq in 2024, it's worth remembering that gold has largely matched the performance of equity benchmarks throughout the year. As we enter the new year and stocks once again face headwinds, gold may just be the vehicle to weather this period of market uncertainty. The SPDR Gold Share (GLD), which tracks the price of gold, peaked in late October 2024, dropping just over 8% of its value before stabilizing in a range of $235 to $250. Although the RSI has been firmly in a bullish range through most of 2024, this key indicator of price momentum spent most of the fourth quarter in a neutral range between 40 and 60. If GLD breaks above the $250 resistance, ideally it will happen when the RSI value is above. 60, which means momentum improves to break out of this intrabound pattern. And similar to the March and August 2024 breakouts, an initial breakout above resistance could bring further upside potential for this traditional safe-haven asset. While the gold chart looks poised for an upside break, the real money could be in playing gold stocks instead. Comparing GLD and VanEck Vectors Gold Miners ETF (GDX) shows that the two ETFs had very similar returns through their October 2024 peak. GLD has fallen about 8% from its October high, while GDX has fallen more than 22% to its December 2024 low. There is a clear performance difference between the two series, confirming that gold stocks have significantly underperformed gold over the past three months. Perhaps a “catch-up” trade is on the horizon, with gold stocks closing the gap on rising gold prices? While GLD is showing a clear consolidation phase, GDX continues to be in a short-term downtrend with lower highs and lower lows. December's countertrend rally stalled at the 50-day moving average, and the latest decline took it below the 200-day moving average for the first time since early 2024. The RSI remains in bearish territory and is currently sitting just around neutral. On the positive side, the PPO indicator recently confirmed a bullish reversal and GDX remains above the 61.8% retracement level based on February 2024. Uptrend until October 2024. If GDX can continue this recent rally and regain its 200-day moving average, ideally if the RSI can move above 60 to read stronger momentum, a new bullish phase for gold stocks could be confirmed. It will be. From a downside protection perspective, we consider this chart to be constructive as long as the price stays above the Fibonacci support around $33. Gold Stocks to Watch If gold stocks perform well and enter a new bullish phase, identifying the strongest stocks in the group could help identify new leadership in the uptrend. . Kinross Gold Corporation (KGC) stands out as a top performer in the gold industry, recently trading above its 50-day moving average that could retest October highs. The relative strength line at the bottom confirms that KGC is improving compared to the S&P 500 while easily outperforming other gold stocks. When in doubt, always look for the best performing stocks in the best performing industry groups. With concerns mounting that the stock could slide into another painful correction in the first quarter, investors may benefit from looking to other areas of potential strength. Given gold's resilience during past bear market phases and the attractive technical setup we've outlined today, we feel the yellow metal could present a real opportunity to outperform. . -David Keller, CMTmarketmisbehavior.com Disclosure: All opinions expressed by (GLD owned) CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent or affiliate companies may have been disseminated previously. Announced by them on television, radio, internet, or other media. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The content is general in nature and does not reflect your unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for the full disclaimer.
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