Gold surged higher yesterday and could be headed to new all-time highs. We recently took a look at gold and gold miners as the commodity traded near an important inflection point; at that time, we speculated that its consolidation was nearing an end. Following up a few leeks later, there have been some positive developments in gold, and it looks like it is indeed ready to continue higher.
In looking at gold, as represented by the SPDR Gold Trust (ETF) (NYSE:GLD), you can see that it surged from April through the early part of May, and settled into a volatile consolidation. While the moves were sharp, GLD managed to hold well above the breakout area and held near its prior highs set in December. GLD has also been able to maintain a pattern of higher highs and higher lows for the past several weeks. The May high near $122 is the key level to watch as a reversal near this level may be a signal that more consolidation is needed before a successful breakout can occur. (For more, see The Anatomy Of Trading Breakouts.)


When gold rallies, it is usually a good idea to pay attention to the miners. Allied Nevada Gold Corp. (AMEX:ANV) was one of the best performers a few weeks ago when gold rallied. After a sharp correction, it could be ready to turn the corner higher again. ANV had cleared an important level in late April and rallied to all-time highs. The recent correction occurred on large volume and ANV still has an unresolved gap near $21-$22 that could cause some problems. However, the recent price action near $19 has been positive and ANV did manage to hold near key support at $17 per share.


Goldcorp Inc. (NYSE:GG) is another gold miner that rallied along with gold in April through early May. It has been following a clearly defined channel as it trades higher, and recently found support near $40-$42. This will be a solid support level to watch moving forward in case GG doesn't follow through higher. The $44 level is the next level to watch on the upside as a move above this level would likely mean an upcoming test of the May high near $47.


Eldorado Gold Corp. (NYSE:EGO) is one of the better looking gold miners out there, although it has also been quite volatile. EGO cleared its base in May and surged higher, tacking on gains of more than 20% in just a few sessions. However, it gave back the entire rally just a few days later. Continuing the roller coaster ride, EGO bounced back near $17 almost immediately and, more importantly, respected the breakout level as support. While EGO may need more time to consolidate the recent volatility, it could be a primary benefactor from a surge in gold. (For more, see The Midas Touch For Gold Investors.)


Bottom Line
Trading miners can be tricky, because gold tends to rally during times of uncertainty in the markets. Then, gold miners often suffer during corrections despite rising prices in the precious metal. However, if the markets can find some footing, or if the yellow metal catches fire, then these stocks could certainly benefit and transcend the markets for a while. All of these stocks respected support on their most recent pullbacks, and appear to have settled into a pattern of higher highs and higher lows. Gold appears to be headed higher, so it's possible that these stocks will have a catalyst for strength.

At the time of writing Joey Fundora did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Options & Futures

    How To Buy Oil Options

    Crude oil options are the most widely traded energy derivative in the New York Mercantile Exchange.
  2. Investing Basics

    Free Cash Flow Yield: A Fundamental Indicator

    Free cash flow can measure a business’s performance as if you’re looking at its net income line.
  3. Technical Indicators

    Four Commonly Used Indicators In Trend Trading

    No single indicator can punch a ticket to market riches, but here are four that remain popular among trend traders.
  4. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  5. Active Trading Fundamentals

    4 Stocks With Bullish Head and Shoulders Patterns for 2016 (PG, ETR)

    Discover analyses of the top four stocks with bullish head and shoulders patterns forming in 2016, and learn the prices at which they should be considered.
  6. Chart Advisor

    Uptrending Stocks Dwindle, a Few Remain (EW, WEC, WR)

    The number of uptrending stocks is shrinking, but here a few that remain in uptrends.
  7. Chart Advisor

    Trade Setups Based on Descending Trend Channels (LBTYK, RRC)

    These descending trend channels have provided reliable sell signals in the past, and are giving the signal again.
  8. Economics

    4 Countries Pleading for Higher Commodity Prices

    Discover what countries are struggling the most from the price collapse in commodities and what these countries require to return to economic growth.
  9. Chart Advisor

    How Are You Trading The Breakdown In Growth Stocks? (VOOG, IWF)

    Based on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
  10. Stock Analysis

    Glencore Vs. Noble Group

    Read about the differences between Glencore and Noble Group, two companies in the commodities business. Learn about accounting accusations facing Noble Group.
  1. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  2. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  3. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  4. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  5. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  6. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
Trading Center