Gold prices stand out

WITH volatile market conditions and rising concerns about a looming recession grabbing the headlines, the effort to achieve superior risk-adjusted returns spreads to alternative categories — like gold and other commodities.

Whether one is buying the physical metals via coins to collectibles, or trading the metals via futures or ETFs, the beauty of satisfying the need for something “different” than traditional stocks and bonds comes in many formats. So the exposure is easy to get, when the timing is right.

Spot gold prices have really stood out to me and my investment group since the S&P 500 and other indexes topped out in late September. Not only had the summer selling in gold become completely exhausted that month, but a true basing out was soon to be occurring. After what (we call around our office) was a “heavy” low of $1,167 in mid August in the gold futures market, where volume was high on two consecutive days -- and most of the volume was actually upside.

Also in that low area was a test of YTD lows in the RSI (relative strength indicator) oscillator. The RSI is a great tool to use when confirming if a move, up or down, has been exhausted, because it factors in the levels of the closing prices of an asset to where it may be overbought or oversold.

Stochastic oscillators told a similar story too, with respect to daily closing prices in the metal that were no longer going down during all day sell offs, but actually reversing trend and closing higher with buyers coming in.

To reiterate, these indicators lined up to suggest at least a near-term bottom was forming.

For the next few weeks, spot gold prices continued to really strengthen their base and build momentum to forge new buying interest.— Foxbusiness.