The Bullish Case for Gold | The Aware Investor


Whereas gold has not achieved a lot in 2022 by way of absolute returns, the GLD has certainly outperformed the SPY by about 11% year-to-date. Why has gold not achieved higher as a protected haven? It is all concerning the US Greenback. 

First, let’s evaluation gold’s function as a “protected haven” throughout bear market phases.

Whereas gold has struggled in absolute phrases, it has handily outperformed the S&P 500 index year-to-date. The GLD is down about 4% in 2022, whereas the SPY is down 15% over the identical time interval.

Should you had knowledgeable me on the finish of 2021 that 2022 was going to be a raging bear marketplace for shares because of issues about inflation, I’d have informed you that considered one of surest bets can be gold. Gold is usually thought-about probably the greatest inflation hedges round! So why has gold not been a greater protected haven whereas equities have been in a constant bear market section in 2022? Fairly merely, the energy within the US Greenback has prevented gold from fulfilling this conventional function.

Each month in 2022, the US Greenback has made a brand new excessive for the 12 months… till October. The $USD has now made a sample of decrease highs and decrease lows during the last six to eight weeks, indicating a possible change in development. The RSI for the US Greenback has now dipped under the 40 degree for one the second time in 2022. This transfer under RSI 40 might point out a “change of character” from a bullish major development to a bearish major development. This short-term weak point within the US Greenback has supplied area for danger property like equities and commodities to reverse their current downtrends and push to the upside. Additional weak point in $USD would enable danger property together with commodities to push increased.

For now, I am watching the 105 degree for the US Greenback. That represents a 38.2% retracement of the Might 2021-September 2022 uptrend and can be an inexpensive draw back goal given the current weak point.

So what’s subsequent for gold?

Because the RSI for the US Greenback has dipped under 40, indicating a brand new bearish section is probably going, the RSI for gold has pushed above the 60 degree after spending most of 2022 under this degree. That means a bullish major development as upside momentum has expanded.

The subsequent upside goal for GLD, utilizing Fibonacci retracements, can be round $167, which is simply 1.5% above Friday’s shut. The 200-day transferring common lies simply above that degree as effectively. If these resistance ranges are violated, we might see additional upside to the 61.8% retracement degree round $177.

When it comes to spot gold, that may counsel resistance within the $1800 vary, with the following upside goal round $1900/oz.

2022 via October has been all about rising rates of interest, a stronger greenback, and falling danger property. If the seasonal tendencies maintain up going into 12 months finish, we could also be going through a bullish run with gold within the driver’s seat!

Wish to digest this text in video format? Head over to my YouTube channel.



P.S. Able to improve your funding course of? Take a look at my YouTube channel!

David Keller, CMT

Chief Market Strategist

Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your individual private and monetary state of affairs, or with out consulting a monetary skilled.

The creator doesn’t have a place in talked about securities on the time of publication.   Any opinions expressed herein are solely these of the creator, and don’t in any means characterize the views or opinions of some other individual or entity.

David Keller

Concerning the creator:
, CMT is Chief Market Strategist at, the place he helps buyers reduce behavioral biases via technical evaluation. He’s a frequent host on StockCharts TV, and he relates mindfulness strategies to investor resolution making in his weblog, The Aware Investor.

David can also be President and Chief Strategist at Sierra Alpha Analysis LLC, a boutique funding analysis agency centered on managing danger via market consciousness. He combines the strengths of technical evaluation, behavioral finance, and knowledge visualization to establish funding alternatives and enrich relationships between advisors and shoppers.
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