Gold prices rose to a record high Tuesday, clearing the $3,500 level for the first time. So, is it too late to get into the gold rally? The charts of gold mining stocks and exchange traded funds provide some interesting cues.
The futures price of gold for September delivery topped $3,500 an ounce late Monday. Up about 35% this year, gold had its best performance from the start of the year until it settled at $3,425 on April 21, according to FactSet. Gold remained in a modest uptrend, trading roughly between $3,185 and $3,490 until recently.
On Friday, gold prices broke above their consolidation. In midday trading in New York, the gold continuous contract was quoted at $3,583.80 per ounce, up 1.3% on the day. It then settled at $3,473.70.
Investors piled back into gold after a fresh round of unsettling headlines. Late Friday, a federal appeals court struck down President Donald Trump's "reciprocal" tariffs. A majority of the court said the president exceeded his authority under the International Emergency Economic Powers Act. The court allowed tariffs to remain in place while the decision is appealed to the Supreme Court.
While that decision left tariff policy clouded, a U.S. District court is deciding whether Trump can fire Fed Gov. Lisa Cook. Trump accused Cook, who was appointed by former President Joe Biden, of making false statements on mortgage applications. Many have rallied in defense of Cook, saying Trump's move threatens the Fed's independence.
Too Late To Invest In Gold?
With gold's price up 42% over the past 12 months and extending its rally, are investors too late to the party?
SPDR Gold Shares and iShares Gold Trust, two ETFs that track gold prices, broke out of flat bases Tuesday.
The SPDR ETF, which edged past a 317.60 buy point Friday, gapped 1.7% higher Tuesday morning. The iShares ETF is now 2% above a 65 buy point. Volume was well above average for both ETFs, an indication that further gains are likely. The buy zone goes up to 5% from each ETF's buy point.
Gold mining stocks rallied. But most are extended, and few remain in bullish chart setups right now. Alamos Gold broke out of a cup-without-handle base with a 31 buy point Tuesday. Volume was running more than double its average, according to IBD MarketSurge.
Newmont, the world's largest gold miner, rose 2%. It is trading at the highest level since April 2022. It's also up 33% from its latest breakout on June 13.
Canada-based McEwen soared 18% to the highest point since July 2021, clearing a five-week pattern. The company reported favorable gold yields at some of its operations.
Gold Prices Push Up Mining Stocks
IBD's gold mining industry group, ranked 11th out of 197 groups, gained 2% midday Tuesday. It was one of the top five groups on the day by price performance.
VanEck Gold Miners climbed 2.5% and is almost at the record high marked in September 2011. The ETF broke out of a seven-week pattern almost a month ago.
The rally in gold prices it's not just investor angst. It also reflects a softer dollar and strong central-bank and institutional demand as global investors rotate out of U.S. Treasurys, says Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"The share of U.S. Treasurys held by foreign central banks has been declining for over a decade, but that shift into gold accelerated this year amid U.S. debt concerns, ratings downgrades, trade tensions and geopolitical risks," the analyst said.
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Various countries central banks' gold allocations have surpassed their Treasury holdings this year, she added. Meanwhile, Indian pension funds are seeking approval to invest in gold ETFs, a sign that demand is strong despite record prices.
Wells Fargo Investment Institute also sees more upside for gold, citing some of the same trends.
"Fundamentally, we expect gold purchases by global central banks and heightened geopolitical strife to support demand growth for precious metals," Sameer Samana, head of global equities and real assets, and Mason Mendez, investment strategy analyst, wrote in a note to clients.
