Has Gold Topped Out?

Forbes

25-06-2025

Sitting Gold Bars and Sitting on Financial Chart Background, Finance Concepts (Depth of field)
The powerful rally in the gold market since the breakout in late 2023 is exactly what the gold bulls were looking for in the early 1980s after gold had peaked out. In those days, there were large conferences for gold investors where 4,000 –5,000 serious 'gold bugs' would tell me they had 30-60% of their investment portfolio in gold.
My suggestions about the merits of diversification did not have much of an impact. These conferences continued for many years. Rallies like the almost 50% gain in late 1987 gave these investors hope, which, of course, is not an investment strategy.
Comex Gold - Monthly
Investors have surged into gold in the past two years after the prior 2020 high at 1920 per ounce was surpassed. So, what is the current outlook for gold?
In August and September of 2011, the Comex gold futures traded well above their monthly starc+ bands for two months in a row, which was a warning sign. That eventually led to a major top as gold dropped from 1920 to 1045. Having followed gold since the 1980's have have noticed that prices often form trading ranges that can last months and even years. In my view, these occur because of extremes in sentiment that take time to be resolved.
Such a range developed between July 2016 and June 2019, line a, that was completed by the June, closing at 1413. This was the start of the current rally that had an April high of 3509. Gold has been above its monthly starc+ band for five months in a row. For those who have followed my starc+ band analysis, know that it does not rule out even higher prices, but the rubber band is getting very stretched. The yearly pivot resistance at 3687 is a potential target for the next rally.
Below the bar chart is the on-balance-volume (OBV), which moved above the downtrend line c in March 2024. The OBV is above its rising WMA in April and is still in a strong uptrend. The Herrick Payoff Index (HPI) is my favorite tool for commodities like gold and crude oil. The HPI uses the price action, volume, and open interest to measure money flow. The HPI moved above zero in November of 2022 as the money flow is still positive. The HPI recently made a new high with prices and no divergences are evident.
Comex Gold - Weekly
The positive slope on the WMA of the OBV and HPI is not giving any warning signs of a top. The gold futures made their high in late April as they moved well above the weekly starc+ band before reversing back to test the 20-week EMA, which is now at $3259. The monthly R1 for July is at $3558 with the weekly starc+ band at 3655. I have highlighted with arrows those times when the starc+ or starc- bands have been reached. These bands do a good job of identifying price extremes on the weekly chart.
Based on the closing prices, the OBV has formed lower highs since April, line a, thereby forming a negative or bearish divergence. The OBV is declining but is still above its WMA. On a long-term basis, the HPI has formed lower highs but has been positive and above the zero line since October 27, 2023. If this is just a pullback in an uptrend, the rising WMA could be tested before gold resumes its uptrend.
Comex Gold - Daily
As the stock market rallied sharply on Tuesday, gold was down over 46 dollars as it closed down 1.4%. The close was below the 20-day EMA at 3348 with the monthly pivot at 3282. This is just above the daily starc-band at 3274. The recent trading range also has support, line b, at 3270 with key resistance at 3472. The tentative monthly pivot for July is at 3373, and a close back above this level would be positive.
The daily OBV has formed lower highs, line c, and closed below its flat WMA, so it is currently negative. That is also the status of the HPI as it closed at -169, so the daily money flow is now negative. The last positive signal occurred on 5/21/25. The HPI needs to move back above the zero line and the resistance at line d, to indicate a new rally.
The monthly analysis requires patience, but it is the most reliable for determining the major trend. Even though gold is quite overbought based on the monthly starc+ band analysis, it does not yet indicate that gold has formed a major top. In contrast, both the weekly and daily analyses are negative and the 20-week EMA at 3259 could be tested. The SPDR Gold Trust (GLD) has dropped back to its monthly pivot at $303.67, so stops could be hit. For longer-term traders, a stop under $296 is suggested, and investors should wait for new weekly buy signals before doing new buying.
For Tom's recent commentary on the stock market after the bombing of Iran can be found here.