Gold - Breakout or Fakeout?

Gold is approaching the key level of $2080 which it has failed at 3 times previously. Many expect it to fail here, I am not so convinced that will be the case.

It’s been a rough road being a precious metals bulls since 2020, it seemed like the metals had so many reasons to go up, but they didn't do much of anything and have stayed range bound for the most part. As far as the mining stocks go, well those have been some of the worst performing assets in the entire market. The mining stocks remain hated even as gold flirts with an all time high.

Posted above is the weekly chart of gold going back to 2020, you can see the huge resistance that $2080 has posed for the metal. Alot of investors and even gold bulls expect this level to hold and for gold to pullback into the range. What might be different this time around?

The fed is likely done one of the most aggressive rate hike cycles in history, this was a huge headwind for the metal these last couple years. Historically once the fed pauses and eventually starts cutting, this has started some massive bull markets for the metal. Alot of the lagging data is now showing that employment is finally starting to weaken and we have also seen inflation cool off substantially, not to mention the political pressure the Fed will be under due to the election year approaching.

Another tailwind gold hasn’t had for along time is that the $DXY is rolling over and it’s bull market is looking over for now. This is not only a tailwind for gold but the commodities space in general.

Sentiment for the sector remains awful, even as gold is near all time highs, it still continues to be ignored, we have even seen long time gold bulls throw in the towel recently after a long painful few years. Large bull market moves start with a wall of worry and doubt. I personally see this type of sentiment as being extremely bullish. Here is an example I saw today of a long time bull shedding positions. We could see alot of FOMO when the big move happens and people panic and re-enter the trade.

Alot of the junior mining stocks actually got back to the covid price lows of 2020 and some of them even cheaper than that. I would say for the last 2 weeks I have been noticing quite a few of them starting to move off of their bottoms. Which has been an encouraging sign. In the past when big gold bull markets have started the whole sector has broken out at once and lots of volume has come into the mining stocks. This hasn't happened yet, but I believe a weekly close above $2080 might prove enough to investors to make it happen.

Lastly here are some symbols of precious metals stocks that broke out this week, that I have added to my watchlist, and are worth some due diligence. I am not positioned in any of them currently, but they all look good technically.

-Fury Gold - $FURY.V, Heliostar Metals $HSTR.V, Carolina Rush $RUSH.V, Arizona Silver $AZS.V, Norseman Silver $NOC.V, Evergold $EVER.V

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