The last week has seen a continuation of volatility in GOLD markets.
However DEG saw a bit of excitement to close out the week as did the GOLD bugs in the US - but more on that later...
Firstly lets look at what happened in the underlying market - GOLD itself...
As expected (and mentioned in last weeks post) the was plenty of chop this week.
Gold began the week with some heavy selling that broke support.
Tuesday GOLD had an attempted push down but was met with some heavy buying that helped it reclaim its bullish range above previous resistance (now support - $1916).
Since that failed push down neither bulls or bears have been able to take full control as the POG has bounced around some key levels of support and resistance - ultimately closing around the 0.5 Fib level from the latest retrace.
The next move in GOLD is tough to pick however there seems to be some evidence that smart money has been sneakily buying gold companies whilst POG is stuck on the treadmill...
GOLD chart below.
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Heres where things get a little interesting.
HUI - GOLD BUGS INDEX had a very bullish close to the week with its best day in a month and one of the best days of the year (similar to DEG).
But unlike DEG, HUI actually closed at the highest level of the year.
As HUI gives exposure to gold companies it seems the smart money is very very bullish on these companies (this is good for DEG) and are potentially loading up before GOLD truly hits the GO button to $2k and beyond...
Whilst GOLD itself has seen a decent retrace since its recent pop the Gold Bugs Index has seen continued buying and has now broken out with its close on the high. Confirmation of this breakout could see a significant run for gold companies
but will want to see follow through this week.
HUI chart below
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Over to the DEG chart and heres where things get a little more exciting.
Thursday we saw a failed breakout from the falling wedge/bull flag pattern.
Then GOLD markets saw some decent buying that night to push it right up to resistance.
As discussed throughout the week DEG had been subject to an increased volume of short activity so I wasn't surprised to see heavy buying on Friday as those short positions were looking risky heading into the weekend.
If we were to look at GOLD movements only then it'd be easy to assume there may be some negativity heading into the week ahead.
However looking at the buying action on HUI and I'm not so sure.
DEG close to the week was incredibly positive with heavy buying on the breakout.
Momentum indicators are swinging back to positive but I'd like to see a breakout above $1.245 before I get too excited.
If that overhead resistance (R1) breaks and holds I'd expect a test on the next resistance (R2) around the low $1.40's.
Obviously any strong upside move that could break and hold R2 would looking to head straight toward ATH (R3) and blue sky beyond.
DEG chart below.
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Atm there still looks to be a lack of clear direction in GOLD markets so we may see some more chop before any decisive moves but there are some very bullish moves happening under the surface so I don't think it'll be long till these moves play out in both GOLD and DEG markets.
As always DYOR
GLTAH
(20min delay)