The range on the XAU, which tracks a selection of gold and silver stocks, bounced off that trendline support that was shown in this chart. When a direction is finally established, hold on to the stocks in that sector, as they’ll probably take a nice ride. XAU over 150 resistance should clear the way for higher stock prices. A break of the trendline support would be a fourth test and breakdown which would make the short sellers happy. You can see the energy building on this weekly XAU chart of the gold sector.
This GDX chart shows a nice gap higher. Unfortuantely the last GDX trade was closed out.
GLG, Glamis Gold Ltd. and AEM, Agnico-Eagle Mines Ltd. are two nice gold stock traders. LIHRY, Lihir Gold Ltd. can be added to that list too.
The XAU Gold and Silver sector has been trading in a bull market for around four years now. Online trading for stocks in this sector seem to go in spurts as with most bull markets. In recent weeks the trading has been rangebound and getting tighter. The stock trader knows what this means. Soon the Gold sector will explode in one direction. You can see that trading is closing in on trendline support again on the daily candlestick chart. When the same pattern emerges on a larger time frame as the weekly stock chart, it signifies the move will probably last even longer.
This sector will be one to watch in the coming days as that range becomes even tighter.
The stock trader likes to trade GLG, Glamis Gold Ltd. and AEM, Agnico-Eagle Mines Ltd. in this sector. NEM, Newmont Mining Corp is also a popular stock to trade in the group.