Precious metals have had a banner year so far. Since late March 2020, the leading gold and silver stocks have soared. Recently in early August, gold and gold mining stocks have made a minor top and have been gradually pulling back since that high. Please note, the larger time-frame charts remain very strong, indicating potential upside for the equity down the road. In the near term, it looks as if gold and gold miners are working off a very overbought condition on the charts.
The VanEck Vectors Gold Miners ETF (GDX) peaked on August 5th, 2020 at $45.78 a share. Since that high pivot, the popular ETF has pulled back and is now trading around $41.30 a share. In early August, the GDX went parabolic on the charts and is simply just working off that extended condition. Traders and investors must wait on a solid pattern before looking for more upside in the near term. One support level that I will be watching in the GDX is the $35.00 area. This is where the GDX has a major retrace level. It is also a breakout point from late June. This will usually be a level where the institutional crowd will defend the GDX. I will be very interested in GDX on the long side at this key level.
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