A quick look at the weekly gold chart shows that the metal is holding above a line of support that goes back over a year.
In contrast, the XAU Index (gold mining stocks) has formed a bearish head and shoulders pattern, which executed when price dropped below the neckline earlier this year. We can see that the breakdown was followed by a brief snapback before the decline continued. At this point, the minimum downside target would be the support line drawn from the October 2008 low.
It would be useful to note how dissimilar the two price lines are. One would think that the stocks would be closely related to the metal, but the charts will quickly clear up that misconception. (Prices are intraday.)
Conclusion: While gold has bounced off long-term support for the time being, the XAU has signaled that there are still lower prices ahead for gold mining stocks.
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Gold, Silver Mining Stocks Still At Negative Territory
Published 04/08/2013, 06:45 AM
Updated 05/14/2017, 06:45 AM
Gold, Silver Mining Stocks Still At Negative Territory
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