Did Gold Just Print a Blow-Off Top?
Double top?
Gold is printing a sizable down candle following yesterday’s shooting star formation. We may be looking at a second lower high developing, raising the risk of a potential double top.
The steep trend line sits well below current levels, and the 50-day moving average doesn’t come in until around $4,830.
Source: LSEG Workspace
RSI mania
Gold’s monthly RSI has cooled marginally, but at 92 it still screams momentum excess.
Source: LSEG Workspace
Showing the way?
We recently outlined our bearish silver logic (here). Silver is the higher beta metal play, so gold should be expected to follow at least part of silver’s downside move.
Source: LSEG Workspace
Far out on the risk curve
Chasing the IBEX has been one of those “far out on the risk curve” trades. There’s little fundamentally in common between Spain’s IBEX and gold, but the psychology behind piling into an asset simply because it’s going up is remarkably similar.
When that dynamic reverses, investors tend to sell whatever is remotely in the money in order to “finance” losses elsewhere.
Source: LSEG Workspace
$4700
The last time the DXY traded at current levels, gold was around $4,700, and gold is still priced in dollars.
Source: LSEG Workspace
When stress hits...
In real systemic stress, the only true global hedge tends to be volatility. Correlations rise, and the VIX is what investors ultimately reach for.
Source: LSEG Workspace
Stressed
Gold volatility remains elevated. Expect erratic price action.
Source: LSEG Workspace
