The Dow Jones U.S. Gold Mining Index ($DJUSPM) held price support on its late-September swoon, but that was not the case with the recent selling. The reason? It's probably the reverse head & shoulders breakout on the U.S. Dollar (UUP). A rising dollar normally sends gold prices (and gold miners) lower. Check out these recent technical developments:
I'd be very careful with gold ($GOLD) and gold mining stocks unless, or until, neckline support on UUP is lost in the 24.40-24.50 area. This reverse head & shoulders pattern is a bottoming formation for the dollar and Thursday's breakout action confirms it. If the dollar continues to rise - as the reverse head & shoulders pattern breakout would suggest - I'd look for further weakness in gold miners.
Happy trading!
Tom
