The current macroeconomic backdrop should ultimately lead to a favorable outcome for precious metals, but, in the interim, it is putting pressure on that asset class. Most notably, higher real interest rates and a strengthening greenback provide headwinds.However, when focusing on gold stocks, we can use several indicators to pinpoint major lows and low-risk buying opportunities.
The vertical lines mark those indicators' extremes and the corresponding GDX lows. The gold stocks reached oversold extremes last week and are rebounding. The 2016, 2018, and 2022 lows required some time, while the 2020 low was an event. I suspect the 2024 low will need a bit of time. Tracking technical support, sentiment, and the breadth indicators shown above can give us a sense of when the market is ripe for a major bottom.
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