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.

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