Gold futures bounced back from support but stalled below key resistance, a pattern analysts flag as a possible bull trap. Hawkish Fed commentary has pushed rate-hike odds sharply higher, yet mid-tier and junior gold miners are posting some of their richest profits in years.
Gold futures are trading at $4,321, bouncing off support but running into a wall of selling below the 9 EMA. The setup, according to one technical read, may be a bull trap rather than the start of a new leg higher.
Fed officials reinforce the hawkish tone
Gold futures edged higher Friday but stayed on track for a weekly decline, pressured by a strong U.S. dollar and expectations of further Federal Reserve tightening. Fed Governor Michael Barr, Philadelphia Fed President Anna Paulson and New York Fed President John Williams all signaled that policymakers will likely need to deliver more increases to curb persistent inflation. Chicago Fed President Austan Goolsbee added that the ongoing energy shock should be treated as a source of persistent inflation rather than a temporary blip.
Following that hawkish barrage, CME FedWatch data shows traders pricing a 70% probability of another quarter-point rate hike at October's meeting, up sharply from 50% before this week's data releases.
Technicals flash a bearish crossover
On the daily chart, gold bounced off support at $4,293.96 but failed to clear resistance at the 9 EMA of $4,357, with all its exponential moving averages — the 9, 20, 50 and 100 — now trading below the key 100 EMA resistance at $4,477.30. On the 1-hour chart, futures completed a "Three Black Crows" pattern after testing resistance at the 100 EMA of $4,346.79, a bearish formation. The last four candles could be decisive if futures break support at $4,272.43.
Miners are still printing record profits
The technical caution around bullion contrasts with what's happening in the mining sector. The GDXJ junior gold-miners ETF was down 5.2% month-to-date midweek, actually more resilient than gold's parallel 3.7% drop. Yet fundamentals tell a different story: the GDXJ top 25 miners earned $3,214 per ounce last quarter, up 67.6% year-over-year, with average all-in sustaining costs across the last four reported quarters running $1,369, $1,490, $1,436 and $1,298 per ounce.
Gold has averaged $4,266 quarter-to-date in Q3, which would be its third-highest quarter ever behind Q1's $4,873 and Q2's $4,512. Despite that backdrop, the GDXJ top 25's average trailing-twelve-month price-to-earnings ratio in mid-August ran just 16.1x — the lowest in at least 41 quarters of tracked data.
Sources: Commodities Analysis & Opinion (Investing.com), Commodities Analysis & Opinion (Investing.com)
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