GoldNuggets — Gold vs Base Metals
Global Gold Price Index
Here’s a preview from the June Monthly Gold Market Chartbook (I will be sending the pack out later today) — we can see 2 clear issues here.
First, our Global Gold Price Index (equal-weighted index tracking gold traded in 14 different currencies) has clearly peaked for now, and put in a lower high. Second, that US$3400 level is really proving to be a major point of resistance. $Gold - main 2508(GCmain)$
Global Gold Price Breadth
Taking another angle on it, the composite breadth indicator in this chart tracks price movements for gold traded in 14 different currencies (and combines 50 day, 200 day moving average breadth and 52-week new highs vs new lows).
The key issue here is that we are seeing a sequence of lower highs in the breadth indicator vs higher highs in the gold price (meaning progressively less stronger and less widespread bullish momentum in the gold market). Technical analysts call that a bearish divergence — something that warns of a potential turning point, and at the very least should make one mindful of risk management.
The upside is that breadth has not yet outright collapsed below the line into bearish territory (something that would flag a transition from bull market and uptrend to more bearish price action). So it’s a case of continued careful monitoring, particularly as the macro backdrop begins to change…
Copper
One sign of the changing macro backdrop is the increasingly bullish setup observed in copper prices.
As Jason Perz notes: “Copper is coiling. Not just any setup—this is a 20-year base. Now we’re back at the top of the range. If it breaks out? It’s not just copper going higher. It’s the world saying: We’re building again.“
Copper/Gold Ratio
Indeed, as it related to gold and precious metals, we may be on the cusp of a big rotation in relative performance as the more growth-sensitive base metals begin to play catch-up and ride the wave of an improving global growth outlook and seeming improvement in the geopolitical risk backdrop.
Industrial Metals
Elsewhere I’ve been talking about the “macro risk sandwich“ — i.e. the two big macro tail risks of recession and deflation on the downside vs reacceleration and resurgence on the upside. The weight of all evidence I track (leading indicators, higher frequency economic activity data, central bank actions and monetary conditions) all point to increasing odds of a global economic upturn into H2, and that’s the kind of thing that will help industrial metal prices.
That’s why I’ve been telling clients to keep track of this chart because it will be the first to let us know as to which side of the macro risk sandwich we’re going to get a bite out of (up = reacceleration, down = recession).
For whom haven't open CBA can know more from below:
🏦 Open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!
Find out more here：
Trade on a Cash Boost Account and enjoy up to 6 months of Commission-Free trading.
💰Join the TB Contra Telegram Group to Get $10 Trading Vouchers Now🎉
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
