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Gold has been languishing for several years in the absence of inflation. Yet the yellow metal quietly reached a five-month high and vaulted a few technical barriers in the process. While the long-term picture is still rather unconvincing on gold – and silver – the short term is looking much better.

Gold and silver stocks continue to lag the metals themselves, but they too have been on the move higher for the past month. Current geopolitical issues help gold and silver as a hedge against uncertainties in the world, and investors should consider modestly increasing their allocations to the sectors.

Gold bottomed last December, but the current leg higher began March 15 after the Federal Reserve announced it was raising short-term interest rates by one-quarter percentage point to 0.75%-1% (see Chart 1). Gains stalled when the SPDR Gold Shares exchange-traded fund (ticker: GLD) reached resistance in its chart.

Chart 1

The launch of 59 tomahawk missiles at Syria ahead of the April 7 trading day couldn’t punch gold through to new highs. It proved to be a temporary setback, and two days later the ETF did break out.

The move was confirmed the next day when the U.S. dollar was knocked down by a tweet from the president saying the greenback was “getting too strong.” The dollar and gold often move in opposite directions.

For now, with the ETF above its major moving averages, it appears the top of its four-year trading range in the 131 area is the next target (the ETF traded at $122.72 Monday afternoon). We can’t forecast what will happen if and when the market gets there (see Chart 2).

Chart 2

For comparison, the top of gold’s long-term range is close to $1,383 per ounce; on Monday, it was trading at $1,291. That would be about a 7% gain.

The VanEck Vectors Gold Miners ETF (GDX) has a bit more work to do before scoring its own short-term breakout (see Chart 3). It still trades just below resistance from its February (and November 2016) highs. It is also still below its flat 200-day moving average. Yet for the first time since its 2016 peak, it is now outperforming the broad market, even if by only a small amount.

Chart 3

The long-term range here is not as well-defined as it is for gold itself. If the gold-mining ETF can make it back to last year’s high of $31.79, it would be tempting to label the entire 2013-2017 pattern as an inverted or upside-down head-and-shoulders pattern. (The ETF traded at $24.56 Monday afternoon.) That would carry long-term bullish implications. but we are getting way ahead of ourselves. There is a lot of price movement and time ahead before the market gets to that crossroads.

Still, a short-term breakout would be a good sign and a reason to increase allocation – at least a little bit – to precious-metals miners.

Consider South African gold miner Gold Fields (GFI), which jumped higher last Thursday as gold moved to within striking distance of the $1,300 level (see Chart 4). This formed an “upside breakaway gap” on its chart – usually a powerful bullish signal, especially when accompanied by strong volume.

Chart 4

A gap is an area on the chart where no trading takes place, as demand swamped supply before the trading session began. The price had to jump, rather than trade smoothly, to restore equilibrium. On a more pragmatic level, it represents a sea change of sentiment from the uncertainty of a trading range to the bullishness of a rising trend.

Gold Fields has a solid market value of $3.3 billion, but its American depositary receipt trades near $4 per share. Investors should be forewarned that such low-priced stocks carry higher risk as well as higher profit potential.

Getting Technical Mailbag: Send your questions on technical analysis to us at online.editors@barrons.com. We’ll cover as many as we can, but please remember that we cannot give investment advice.

Michael Kahn, a longtime columnist for Barrons.com, comments on technical analysis at www.twitter.com/mnkahn. A former Chief Technical Analyst for BridgeNews and former director for the Market Technicians Association, Kahn has written three books about technical analysis.

Comments?E-mail us at online.editors@barrons.com

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