Wednesday’s surge in gold above $1500 was fueled by stock market fears and a capitulating bond market. The 10-year treasury yield crashed to 1.59% on Wednesday, and an interim low is likely.
TREASURY YIELDS CAPITULATE: The move below 1.95% in 10-year treasury yields triggered multiple capitulation signals. The selloff reached a panic extreme on Wednesday, and a bounce towards 2% is supported.
GOLD DAILY CHART: Gold futures reached a high of $1522.70 Wednesday in blowoff type fashion. Prices are challenging long-term resistance between $1525 and $1550. The MACD is diverging negatively, advising decaying momentum. The technicals maintain a topping process in gold, which should result in a multi-week correction.
GDX DAILY CHART: The gold mining ETF gapped higher on Wednesday but finished below its opening tick, forming a black candle (usually bearish). A daily close below $28.67 in the coming days would register an exhausting gap and establish a reversal. Prices would have to close above $30.00 to trigger further upside.