In late August, the price of gold - as represented by the SPDR Gold Shares (ARCA:GLD) ETF - broke out of a long-term triangle pattern, and that breakout is now facing its first area of major resistance. Breaking through that area keeps the possibility alive that the upside profit target will be reached. Several major gold stocks involved in exploration and production are also at important technical levels. These stocks do not necessarily move with the price of gold, lead or lag the price movements seen in the gold market.

SPDR Gold Shares ETF made a high at $185.85 in September 2011. This became the starting point of a triangle pattern which lasted until the end of August 2012. The triangle covers a price range (height of the chart pattern) of approximately $35, which can be added to the breakout point of $162 to get a long-term profit target of $197. Before that can occur, the gold ETF will need to push above $175 - a stiff resistance level in both November 2011 and March 2012. If that level is broken, it is a strong indication the price trend is once again higher and the consolidation phase the ETF has been in for the last year is over. A false breakout, or inability to climb above $175, means the price is likely to fall toward support at $160 and $150.

SEE: The Gold Showdown: ETFs Vs. Futures

Barrick Gold Corporation
(NYSE:ABX) has been in a downtrend since peaking at $55.95 in September 2011. The rally through August and September of this year has brought the price right to that downward sloping trendline - currently intersecting at $43. Crossing above that trendline is a positive sign for the stock long-term, but equally important is moving above the June high at $43.30. Both of these events need to occur in order to give evidence that the trend may be reversing and heading higher. The 52-week low for the stock is $31. Any pullback in the price that stays above that level creates a higher low and provides evidence of an emerging uptrend. Currently, the trend remains down with near-term support at $39.90. If the price drops below near-term support, look for a further dip which could hold above the 52-week low or create a lower low.

Yamana Gold, Inc (NYSE:AUY) has been in an uptrend since May, but accelerated to the upside through the summer months. The nearest support is $18.90 and $19.65 is the nearest resistance. A breach of either of these levels indicates the likely short-term direction of the stock. Longer-term, the current rally looks to be the third wave of a five-wave trend - composed of three waves up and two waves down. The five-wave pattern is based on the Elliot Wave Theory. Wave counts on individual stocks are often not as reliable as they are in major indexes, but the counts can still be useful. The support and resistance levels mentioned tell us whether this current wave is likely to continue higher or if a correction is about to begin. If a correction begins - and at some point it will - support should develop near $17, at which point the stock is likely to commence its fifth wave upward. An eventual target price range is $21 to $22.

Kinross Gold Corporation
(NYSE:KGC) moved lower in a descending wedge pattern from September 2011 until June 2012. The stock then leveled off and has since been in an ascent mode. Wedges are often reversal patterns, so the breakout signals what could be a long-term change from a downtrend to an uptrend. Support is at $9.45 - the September 26 low - with support also at the ascending trendline, currently intersecting at $9.75. Assuming support isn't broken, an approximate target of $12 to $13 can be established based on the trend channel the stock is currently trading in. If support is broken it draws the uptrend into question, but a move below the 52-week low of $7.11 is highly unlikely in the next couple months now that the stock is exhibiting an upward trend.

SEE: Analyzing Chart Patterns: The Wedge

The Bottom Line
Gold, represented by a gold ETF and a three gold exploration and production stocks, is at significant technical levels. Overall the price outlook is bullish for the SPDR Gold Shares ETF, Yamana Gold and Kinross Gold, although that outlook can change if the support levels are broken or if the prices fail to move through resistance levels. Barrick Gold Corporation could go either way at the moment. It is facing significant resistance levels amidst a long-term downtrend, but if those levels are broken it would be a positive sign for the stock.

Charts courtesy of

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Chart Advisor

    Bumpy Roads Ahead In Transportation

    Investors are keeping an eye on the transportation industry. We'll take a look at the trend direction and how to trade it.
  2. Investing

    How ETFs May Save You Thousands

    Being vigilant about the amount you pay and what you get for is important, but adding ETFs into the investment mix fits well with a value-seeking nature.
  3. Mutual Funds & ETFs

    3 Fixed Income ETFs in the Mining Sector

    Learn about the top three metals and mining exchange-traded funds (ETFs), and explore analyses of their characteristics and how investors can benefit from these ETFs.
  4. Chart Advisor

    Agriculture Commodities Are In The Bear's Sights

    Agriculture stocks have experienced strong moves higher over recent weeks, but chart patterns on sugar, corn and wheat are suggesting the moves could be short lived.
  5. Investing News

    Top Tips for Diversifying with Mutual Funds

    Are mutual funds becoming obsolete? If they have something to offer, which funds should you consider for diversification?
  6. Professionals

    Top Stocks to Short, Go Long On to Beat the Market

    A long/short portfolio can help weather a variety of market scenarios. Here's how to put one together.
  7. Mutual Funds & ETFs

    Top 4 Asia-Pacific ETFs

    Learn about four of the best-performing exchange-traded funds, or ETFs, that offer investors exposure to the Asia-Pacific region.
  8. Mutual Funds & ETFs

    Top 3 Japanese Bond ETFs

    Learn about the top three exchange-traded funds (ETFs) that invest in sovereign and corporate bonds issued by developed countries, including Japan.
  9. Chart Advisor

    4 European Stocks to Consider Buying

    European companies, listed on US exchanges, that are providing buying opportunities right now.
  10. Savings

    Become Your Own Financial Advisor

    If you have some financial know-how, you don’t have to hire someone to advise you on investments. This tutorial will help you set goals – and get started.
  1. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  2. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  3. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  4. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  5. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  6. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!