Back in mid-March, precious metals and mining stocks saw a sharp pullback driven by the initial shock surrounding the Iran war. At the time, I pointed out that the pullback was overdone and expected a rebound as tensions eased and cooler heads prevailed. That scenario has since played out. Now, I want to walk through what I’m watching next and where I see the precious metals complex heading from here.
To understand today’s update, I recommend first reviewing my two tutorials. The first explains how to identify and trade with the trend, and the second covers when to buy dips and sell rips.
Let’s start with gold, which leads the overall precious metals complex. As I’ve been showing, gold remains in an uptrend, as indicated by its upward-sloping 200-day moving average, and the March pullback did nothing to damage that trend. At the worst of the sell-off, gold became deeply oversold according to the Williams %R indicator plotted below the price chart, which indicated a high likelihood of a rebound, and that is what is happening now.
As a reminder, I believe gold is only about two years into a secular, or long-term, bull market that I expect to last at least a decade based on historical trends (learn more). Because of that outlook, the March pullback did not concern me, as I viewed it as a routine correction of the kind that occurs in every bull market.
In my updates over the past month, I’ve also highlighted gold’s support zone between approximately $4,300 and $4,600, which formed at key peaks and lows over the past six months.