Fed’s Decision and What’s Actually Important for Gold Miners

The Fed has decided, and the Fed has spoken. No cut, a smaller chance for more cuts soon. What’s next?

As the uncertainty is gone, and so is the intraday volatility. I warned you that there might be some price noise during the day, and that’s exactly what happened. The trends are now likely to resume.

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Gold price verified its move below its 50-day moving average, which is an important technical development. After all, gold has been above this average since it soared in March. The move back below it is really telling. And the verification of the breakdown below it is even more important.

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Silver jumped higher, too, and it already declined more than it had gained yesterday. In fact, it just moved to its new monthly lows in the overnight trading.

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The same with miners – the GDXJ jumped yesterday, and it declined before the end of the day. That was just a tiny rebound that doesn’t change anything.

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In particular, it doesn’t change the link to 2022 in the GDXJ. Yesterday’s rebound is not even visible on the above chart. The decline is likely to continue now, just as it continued in 2022 after the similar double-top pattern, with the second top being higher.

Based on this analogy, the next more meaningful rebound could start from around $36-$37 – that’s where we have the 200-day moving average.

Now, in the title of today’s analysis, I hinted that I’ll discuss what’s actually important (Fed’s interest decision wasn’t it – it was pretty obvious what was about to happen).

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Miners invalidated their move above the previous medium-term high. The top above, which the XAU Index moved and then declined back below, was really important, which means that the invalidation of the breakout is also important and very bearish.

And it’s not just the XAU Index where we see this development. We see the same thing pretty much across the board: in the HUI Index, in the GDX ETF, and in the GDXJ ETF.

The really, really, really important thing about this is that this is not the first time that we have seen something like that. I marked the previous cases with dashed lines.

The move below this line in 2008 was followed by an enormous decline.

The moves below this line in 2011 and 2012 were followed by an enormous decline.

The move below this line in 2021 was followed by a big decline.

The move below this line in 2022 was followed by a huge decline.

And we saw it this month.

This is not to be ignored or taken lightly. This is a powerful, highly effective sell signal of great importance.

And yes, the above cases were associated with declining gold and silver, too, but the indications were not as precise. But I’ve been writing about the extremely bearish potential in junior mining stocks for some time now, so seeing yet another major confirmation of this scenario shouldn’t be that surprising.

Of course, there will be corrections along the way, but it seems that it would be better to focus on gold on the long side – unless we see clear reversal signs in the miners and/or silver that is.

As always, I’ll keep my subscribers informed.

Thank you for reading my today’s free analysis. Like I wrote earlier today, the current opportunity (actually, there’s more than one on the horizon) will likely not be here for much longer. I’ll do my best to navigate my Gold Trading Alert subscribers through the volatile waters, and I invite you to join them before it’s too late.

Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief